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relations.
specialized software designed to track, report, and provide metrics for the performance of
document reviewers in large e-discovery projects, which they licensed to Defendants for
the period August 2007 to June 2008 (the “Performance Metrics Software”). Plaintiffs
duly obtained a federal copyright registration for the Performance Metrics Software.
Software became central to Defendants’ efforts to promote their temporary legal staffing
and e-discovery services to law firms and other consumers of e-discovery and legal
staffing services. The unique Performance Metrics Software gave Defendants the ability
to win business away from other e-discovery or legal staffing providers who could not
and are currently utilizing the Performance Metrics Software without any authorization or
license. Upon information and belief, during the nine-month period that Defendants have
utilized the Performance Metrics Software without authority, they have profited in the
amount of at least $28 million – all built on Plaintiffs’ innovative software and their
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PARTIES, JURISDICTION AND VENUE
company with its principal place of business in New York, New York.
principal place of business located in New York, New York. On information and belief,
President of The Peak Organization, Inc. On information and belief, Mr. Eichenberg
information and belief, Mr. Schlanger resides in New York, New York.
information and belief, Mr. Dalewitz resides in New York, New York.
subsidiary of Defendant The Peak Organization, Inc. On information and belief, Mr.
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13. The Court has subject matter jurisdiction over this action pursuant to 28
U.S.C. §§ 1331, 1338(a), and 1367. Plaintiffs allege claims for copyright infringement
arising under the Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., passing-off and unfair
competition under the Lanham Act, 15 U.S.C. § 1125(a), and for related common law
and state law claims of misappropriation of Plaintiffs’ trade secrets and other confidential
14. Venue is proper in this District under 28 U.S.C. §§ 1391(b) and 1400(a),
as a substantial part of the events giving rise to this action occurred in this District, and
FACTUAL BACKGROUND
development and consulting company that develops, customizes and provides computer
software solutions to businesses ranging from law firms to investment banks to computer
software, legal case management software, and various interactive web applications. In
industry, including multi-company accounting software that permits entities with multiple
business units to consolidate their general ledgers into a single database, investment
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portfolio management software, and interactive web-based job posting software that
integrates the needs of job candidates, staffing services, and potential employers.
Argentto has applied for and/or obtained copyright registrations for these and other
17. In 2006 and early 2007, recognizing that no one in the e-discovery
industry had been able to find a solution to the problem of quality control and efficiency
with the investment of considerable expense and programmer time, a unique and
proprietary software system to analyze and chart the progress and performance of large-
scale review of documents in the course of complex legal proceedings. This software,
which no one in the e-discovery or staffing industries had previously been able to create,
accuracy, and efficiency of individual reviewers and the review team as a whole. The
metrics include: (1) documents per hours and averages; (2) pages per hours and averages;
(3) hours logged by reviewers; (4) documents reviewed; (5) documents re-reviewed; (6)
documents with no tags; (7) pages reviewed; (8) tags made; (9) tags at the first, second
and QC level; (10) additional tags added at the first-level review; (11) document review
19. The Performance Metrics software (1) is platform agnostic, meaning it can
be used on any document review platform; (2) enables a user to manage multiple projects
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simultaneously; (3) is web-based, so it is easy to use and secure; (4) has customizable
expense reporting; and (5) provides graphical displays of individual as well as group
performance.
20. With the Performance Metrics software supervisors can (1) access a
consolidated history of individual reviewer skills for use on future projects; (2) identify
under-performing reviewers; (3) identify inaccurate coders; (4) share performance data
with the review team, providing an incentive to achieve; and (5) export data into
discovery industry. An IT specialist at one top New York law firm, upon first viewing
the software, exclaimed that that law firm had been trying for seven years, without
success, to create this document review management and metrics functionality. Although
it is based on proven Microsoft technologies such as the SQL Server 2005 database
software and the .NET programming language and framework, the user interface, data
algorithms, data tables, drivers, and database structure of the Performance Metrics
lines of software source code. Over 6,000 hours of Argentto programmer time, over a
22. Nick Santino obtained a U.S. Copyright Certificate of Registration for the
Metrics Software.
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ARGENTTO’S EFFORTS TO PROTECT THE PERFORMANCE METRICS
SOFTWARE TRADE SECRET
23. Argentto maintains the confidentiality of its trade secrets, including its
24. First, all Argentto employees and contractors are required to sign strict
25. Second, Argentto’s programmers who develop, test, maintain and upgrade
its source code are the only individuals at Argentto who have access to the source code
name and password without which the programmer cannot access the system on which
the source code resides. Only Nick Santino, the company’s president, has the password
to directly access the server containing and running the Performance Metrics Software
source code.
software, including the source code, outside the office. At the office, Argentto
programmers are permitted access only to their own workstations and computers.
27. Fourth, Argentto’s offices, including the servers on which its software
source code resides, are locked, secured, and protected by guard dog.
28. Finally, while Argentto provides its actual and prospective customers and
licensees with access to its software user interfaces to view its form and functionality,
and may offer limited access to underlying data to the extent the customer or licensee
requires such access for daily use, absolutely no one other than Argentto’s own computer
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29. The Performance Metrics Software source code was always maintained
and run on servers belonging to Argentto. Neither Peak nor any third party was ever
permitted access to the source code for the Performance Metrics Software.
1970. Beginning as a staffing agency for internal audit personnel, Peak now comprises
thirteen operating divisions providing staffing services and technological solutions to the
31. Although Peak had been in existence for decades, its accounting systems
and other IT systems were in a shambles as late as 2001. Peak had clearly outgrown its
internal IT capability. For example, even though Peak had invested hundreds of
thousands of dollars in its accounting systems over the years, it still did not have a means
complex litigation with a new subsidiary called Peak Document Solutions. This effort
existing software solutions for accounts payable, general ledger, and certain other
accounting functions. With the success of these first initiatives, Peak then requested that
Argentto provide software for accounts receivable, payroll, and additional accounting
functions. In January 2003, Argentto provided a “live payroll” software system, finally
bringing Peak’s payroll capabilities into the 21st century. Argentto consistently provided
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34. Argentto’s accounting systems, including its innovative “multi-company”
system permitting consolidation of the accounting for Peak’s multiple divisions, were
proprietary and unique. Argentto ran the accounting software, and maintained the “data
35. In the summer of 2003, Nick Santino, the president of Argentto, realized
that Peak was still using paper time slips and fax machines to keep track of the hours its
temporary employees were working; this system caused Peak’s billing, accounting, and
developing a “beta” version of a web-based solution for timecard entry and approval.
and Peak ultimately adopted the use of this web-based solution as “PeakInteractive.net”
in February 2004. The ability for temporary employees, and their supervisors at client
companies, to report and approve hours using a web-based interface catapulted Peak to a
leading position among staffing services. Because of the strong promotional benefit of
this innovative software solution, Santino was asked to accompany Peak executives in
sales calls to prospective clients. In numerous instances, new staffing client companies
cited Peak’s web-based timecard entry and approval system as the primary reason for
36. On information and belief, over the course of the time period from 2002 to
2006, Peak’s revenues grew from approximately $18 million in annual revenues (with a
37. In 2004, Peak engaged Argentto’s consulting capacity to manage its entire
network, including e-mail. Peak asked Nick Santino, the president of Argentto, to
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become an “outsourced CIO” (chief information officer).
38. In late 2005, Mr. Santino proposed that Peak add to its website Argentto’s
web-based staffing software, which would allow potential job candidates to post
availability and check listings, staffing companies (such as Peak or Monster.com) to post
listings and monitor needs, and potential client companies to post needs and check on job
candidates. Peak adopted Argentto’s web application, which became hugely popular
with Peak’s own employees, as well as Peak’s clients and staffing job candidates.
39. In 2006, Defendant Eichenberg told Santino that his “dream” for Peak was
to become successful in the rapidly growing e-discovery field, which Peak had previously
tried and failed to do. Peak sought to re-launch its efforts with a new e-discovery
subsidiary, Defendant Peak Discovery, Inc. Peak intended to sell its e-discovery services
alongside the temporary legal staffing services offered by its existing subsidiary Peak
discovery industries, and realized that no one had ever created software to monitor the
speed and efficiency. To an engineer like Santino, the significant variability in these
areas was a major flaw in the cost-efficiency of the entire e-discovery and document
review process.
42. Argentto entered into an agreement with Peak for the use of Argentto’s
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Performance Metrics Software. The agreement was reflected in the “Terms and
43. Section 5.1 of the Terms and Conditions of the agreement between
OWNERSHIP RIGHTS
5.1 Ownership. As between Client and Argentto Systems,
Inc., except as set forth below in this Section 6, all right,
title, and interest, including copyright interests and any
other intellectual property, in and to the Software produced
or provided by Argentto Systems under this Agreement
shall be the property of Argentto Systems, Inc.. To the
extent of any interest of Client therein, Client agrees to
assign and, upon its creation, automatically assigns to
Argentto Systems the ownership of such Software,
including copyright interests and any other intellectual
property therein, without the necessity of any further
consideration.
45. Section 7.1 and 7.2 of the Terms and Conditions provide:
PROPRIETARY INFORMATION
7.1 Trade Secrets. Client acknowledges that in order to
perform the services called for in this Agreement, it shall
be necessary for Argentto Systems to disclose to Client
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certain Trade Secrets that have been developed by Argentto
Systems at great expense and that have required
considerable effort of skilled professionals. Client further
acknowledges that the Software will of necessity
incorporate such Trade Secrets. Client agrees that it shall
not disclose, transfer, use, copy, or allow access to any such
Trade Secrets to any employees or to any third parties,
excepting those who have a need to know such Trade
Secrets in order to give effect to Client's rights hereunder
and who have bound themselves to respect and protect the
confidentiality of such Trade Secrets. In no event shall
Client disclose any such Trade Secrets to any competitors
of Argentto Systems, Inc..
46. These Terms and Conditions were essential terms in the agreement
between Argentto and Peak. As set forth in the Terms and Conditions and agreed
between the companies, all intellectual property and proprietary trade secret rights to the
Performance Metrics Software belonged to Argentto, and Peak’s license to use the
announced that it was offering the Performance Review Software as its “proprietary
software tool,” “Peak Review Metrics,” which formed the centerpiece of its e-discovery
and temporary legal document reviewer staffing services. Indeed, in Peak’s promotional
materials, the “Performance and Accuracy Metrics” software was frequently listed as the
most important benefit of engaging Peak to provide document review and e-discovery
services. Peak demonstrated the Performance Review Software at the annual American
Bar Association LegalTech event in February 2008, and utilized these demonstrations to
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gain numerous new clients for Peak’s e-discovery and document review services.
48. Santino was repeatedly asked to assist Peak in promoting the Performance
Review Metrics software in sales calls to prospective clients. Numerous potential clients
commented that they had never seen this capability offered by any e-discovery or legal
staffing provider. The performance metrics software gave Peak a unique edge in the e-
discovery and legal staffing markets, and Peak received numerous engagements based on
potential clients’ interest in the software’s capabilities. On information and belief, during
the latter half of 2008, Peak derived revenues of at least $28 million from such clients,
who retained Peak primarily because of the performance metrics capability of the
49. On information and belief, between 2006 and 2007, Peak’s revenues grew
from approximately $24 million to approximately $50 million. During 2007 and 2008,
Peak grew from one office in New York to add five new locations.
50. On information and belief, Peak began to hatch plans to betray Argentto
and steal its software as early as November 2007. On November 27, 2007, a Peak
executive wrote to Eichenberg, “There are many developers out there that could reverse
engineer what [Santino] has written especially if you have the source code and even if
51. The relationship between Peak and Argentto began to unravel in the spring
52. In May 2008, Santino was working on a project late in the evening at
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Peak. When he left the office in the evening, he accidentally left behind a flashlight, a
screwdriver, and a CD case with several CD-ROMs containing, among other files, the
53. The next day, the items were not where Santino left them. When Santino
inquired about the location of his property, the flashlight and screwdriver were returned
to him, but the CD case was not. Santino made numerous inquiries, but the CD case and
services, and Santino was removed from his position as “outsourced CIO.”
55. At the time of the termination, Peak owed Argentto $30,000 in fees for
Peak’s data on Argentto’s servers for another three months, until September 2008, so that
Peak could utilize new contractors to extract its accounting, payroll and other data from
57. In early 2008, Argentto began performing work directly for Hewlett-
Packard (“HP”), in connection with a consulting services contract HP was performing for
JP Morgan Chase. Argentto expected that this relationship, which arose from HP’s
positive views of software Argentto had provided to Peak, would lead to hundreds of
thousands of dollars in revenue. In June 2008, however, shortly after the termination of
disparaged Argentto to HP, and thereby caused HP to end its relationship with Argentto
within weeks of the end of the Argentto-Peak relationship. On information and belief,
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Greenberg destroyed the Argentto-HP relationship purely to harm Argentto, with no
59. In the summer and fall of 2008, Peak repeatedly requested and demanded
that Argentto provide the source code for Argentto’s proprietary software. Argentto
steadfastly refused to give up its intellectual property and proprietary trade secrets.
60. After the termination of the Peak-Argentto relationship, Peak replaced its
Argentto accounting software with other software packages. Similarly, without the right
to use the Argentto software, Peak replaced the interactive web site,
surprising, because Argentto strictly controlled access to its source code, and Peak lacked
61. In stark contrast, as Plaintiffs have now learned, Peak has continued to
use, distribute, market, and promote the Performance Review Software, without change,
since before the termination of the Argentto-Peak relationship. In other words, the only
software package that Peak has continued to use is the software for which Peak had
62. In the first week of February 2009, the American Bar Association held its
annual LegalTech convention in New York City. Peak had announced the Performance
63. Later that month, Nick Santino learned from a friend who attended the
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LegalTech conference that Peak had been promoting the “Peak Review Metrics” software
using paper handouts at the LegalTech conference itself. If prospective clients showed
interest in the software, Peak would then schedule “private demonstrations” of the
software. This behavior suggested that Peak was trying to keep the user interface and
other aspects of the Peak Review Metrics software from being revealed to the public and,
64. In the month since the LegalTech show, Peak has more openly promoted
65. It would take a team of programmers many months, at great cost, to write
through “reverse engineering.” The Performance Metrics Software remains unique in the
industry.
Dalewitz have personally participated in and profited from the effort to misappropriate
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FIRST CAUSE OF ACTION:
COPYRIGHT INFRINGEMENT PURSUANT TO THE COPYRIGHT ACT
(Against Defendants The Peak Organization, Inc., Peak Counsel, Inc., Peak Discovery,
Inc., Richard Eichenberg, Arnold Schlanger, and Michael Dalewitz)
68. Plaintiff repeats and realleges each and every allegation set forth above as
501, Defendants have infringed and will continue to infringe Plaintiffs’ federally
70. Defendants’ infringing conduct has caused and, unless restrained by this
Court, will continue to cause Plaintiffs irreparable injury. Plaintiffs have no adequate
officers, agents, and employees, and all other persons acting in concert with them, from
72. Plaintiffs are further entitled to recover from Defendants the damages
Plaintiffs have sustained and will sustain as a direct result of Defendants’ wrongful acts.
73. Plaintiffs are further entitled to recover from Defendants the gains, profits,
and advantages Defendants have gained as a result of their wrongful acts. Plaintiffs are at
present unable to ascertain the full extent of the gains, profits, and advantages Defendants
have obtained by reason of their acts in violation of the federal copyright laws.
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74. By reason of the foregoing, Plaintiffs are entitled to damages in an amount
($30,000,000).
75. Defendants are willfully engaged in, and are willfully engaging in, the acts
complained of with oppression, fraud, and malice, and in conscious disregard of the
rights of Plaintiffs. Defendants’ infringing actions are willful and deliberate, and
Plaintiffs are entitled to statutory damages, as well as attorneys’ fees and costs pursuant
76. Plaintiff repeats and realleges each and every allegation set forth above as
77. The information reflected in the Performance Metrics Software and source
code, and the accompanying unique and proprietary techniques for structuring data and
distributing such data to and from various databases and document review platforms,
constitute Plaintiffs’ confidential and proprietary information and trade secrets (the
“Trade Secrets”).
78. The Trade Secrets give Plaintiffs a significant competitive advantage over
its existing and would-be competitors, including but not limited to, Defendants The Peak
Organization, Inc., Peak Counsel, Inc., and Peak Discovery, Inc., to the extent
Defendants use the Performance Metrics Software capabilities to market their services
and to obtain engagements. This advantage would be lost if the Trade Secrets became
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79. Plaintiffs have made reasonable efforts under the circumstances to
80. Plaintiffs’ Trade Secrets derive independent economic value from not
being generally known to the public or to other persons who can obtain economic benefit
procuring a copy of Plaintiffs’ source code, (b) illicitly using Plaintiffs’ Trade Secrets
without authorization, and (c) illicitly disclosing Plaintiffs’ Trade Secrets to third parties
without authorization. Defendants have utilized and disclosed Plaintiffs’ Trade Secrets
for the benefit of themselves without Plaintiffs’ consent and without regard to Plaintiffs’
82. Defendants’ conduct was, is, and remains willful and wanton, and was
undertaken with blatant disregard for Plaintiffs’ valid and enforceable rights.
83. By reason of the foregoing, Defendants have been unjustly enriched and
Trade Secrets, and will continue to suffer irreparable harm, which cannot be adequately
redressed at law, unless Defendants, their agents, and all those acting in concert with
84. Plaintiffs are further entitled to recover from Defendants the damages
Plaintiffs have sustained and will sustain as a direct result of Defendants’ wrongful acts.
85. Plaintiffs are further entitled to recover from Defendants the gains, profits,
and advantages Defendants have gained as a result of their wrongful acts. Plaintiffs are at
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present unable to ascertain the full extent of the gains, profits, and advantages Defendants
($30,000,000).
87. Plaintiffs also reserve the right to see punitive and exemplary damages,
88. Plaintiff repeats and realleges each and every allegation set forth above as
part the Performance Metrics Software, and used the same as a service of Defendants,
thereby passing off Plaintiffs’ goods and services as the goods and services of
90. Defendants, upon information and belief, have also traded off of the
functions of the Performance Metrics Software, representing that they had the right to use
Plaintiffs’ trade secrets and the operations of the Performance Metrics Software in order
to unfairly compete with Plaintiffs, in violation of Section 43(a) of the Lanham Act, 15
U.S.C. § 1125(a).
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sponsorship, or approval of the goods and services of Defendants;
and/or
c) represent that Plaintiffs’ goods and services are the goods and services
of Defendants; and/or
d) represent that Defendants’ goods and services are the goods and
creates a false indication of origin and is calculated to deceive the public into believing
that Defendants are the owners, creators and/or developers of the Performance Metrics
93. Plaintiffs have suffered irreparable harm and there is no adequate remedy
at law.
94. Unless Defendants are restrained from their wrongful conduct, Defendants
will continue to cause injury to the business and the business reputation of Plaintiffs.
95. Plaintiffs are further entitled to recover from Defendants the damages
Plaintiffs have sustained and will sustain as a direct result of Defendants’ wrongful acts.
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96. Plaintiffs are further entitled to recover from Defendants the gains, profits,
and advantages Defendants have gained as a result of their wrongful acts. Plaintiffs are at
present unable to ascertain the full extent of the gains, profits, and advantages Defendants
($30,000,000).
wrongful acts, Plaintiffs are entitled to an award of treble damages, attorneys’ fees, and
exemplary damages.
99. Plaintiff repeats and realleges each and every allegation set forth above as
100. Defendants were bound by the Terms and Conditions of their agreement
102. In accordance with these contracts, Defendants were bound to hold all of
103. In accordance with these contracts, all rights in and to the works created
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104. In breach of their contractual obligations, Defendants without Plaintiffs’
knowledge or consent have continued to use, disclose and/or share with third parties
knowledge or consent have held out the Performance Metrics Software to be their own
proprietary software.
107. The aforesaid acts of Defendants have caused and shall cause Argentto
Systems damages in an amount not yet fully determined, but believed to be in excess of
108. Plaintiff repeats and realleges each and every allegation set forth above as
and confidential and proprietary business information including, among other things,
Plaintiffs’ source code and Performance Metrics Software, has unjust enriched
Defendants by depriving Plaintiffs of their profits from the sale or licensing of their
Defendants’ acts and are suffering money damages in an amount not yet fully
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SIXTH CAUSE OF ACTION: CONVERSION
(Against Defendants The Peak Organization, Inc., Peak Counsel, Inc., Peak Discovery,
Inc., Richard Eichenberg, Arnold Schlanger, and Michael Dalewitz)
111. Plaintiff repeats and realleges each and every allegation contained above
112. The Trade Secrets and confidential and proprietary business information
including, among other things, Plaintiffs’ source code and Performance Metrics Software,
113. Upon information and belief, Defendants have taken Plaintiffs’ property
and used it for their own benefit, by means that include, but are not limited to, stealing
Plaintiffs’ back-up CD-ROM disks and utilizing the intellectual property contained
115. Plaintiff repeats and realleges each and every allegation contained above
118. Defendant Philip Greenberg was and is aware of the business relationship
and prospective business relationship that existed between Argentto and Hewlett Packard.
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119. Defendants Philip Greenberg knowingly and intentionally interfered with
Packard.
120. Defendant’s acts were intentional and carried out for the purpose of
customers. Defendant’s acts were malicious, designed to cause harm to Plaintiffs, and
122. Plaintiff repeats and realleges each and every allegation contained above
123. The acts described above constitute unfair competition under New York
law. The acts include, but are not limited to (a) misappropriation of trade secrets; (b)
conversion; and (c) tortious interference with contract and prospective advantageous
business relationships.
124. Defendants’ acts were and are intentional and carried out for the purpose
125. Plaintiffs have been damaged by Defendants’ actions and are also
suffering irreparable harm for which they has no adequate remedy at law.
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plaintiffs have suffered money damages in an amount to be determined at trial.
JURY DEMAND
inc1uding but not limited to Plaintiffs’ source codes and other computer
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person representing them or acting on their behalf: (i) that relate to
Plaintiff or any affiliated entities; or (ii) that otherwise relate to the subject
not limited to, Plaintiffs’ source codes and other computer codes,
the originals and all copies – whether on paper, in computer memory, file,
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licensing, disseminating, transferring, operating, or otherwise utilizing the
program;
customers;
Inc., Peak Counsel, Inc., Peak Discovery, Inc., Richard Eichenberg, Arnold Schlanger,
and Michael Dalewitz in an amount to be determined at trial, but believed to be not less
than $30 million, plus punitive damages to punish Defendants for their intentional
misconduct;
amount to be determined at trial, but believed to be not less than $1 million, plus punitive
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