Applestein et al v. Kleinhendler et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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ANDREA BIVENS, as personal
representative and executor of Allan H.
Applestein, and DIATOMITE
CORPORATION OF AMERICA, a
Maryland corporation,
Plaintiffs,
-against-
HOWARD KLEINHENDLER, an
individual, WACHTEL MISSRY LLP,
a limited liability partnership, and
DOES 1 through 5,
Defendants.
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MEMORANDUM AND ORDER
Case No. 20-CV-1454-FB-MMH
Appearances:
For the Plaintiffs:
THOMAS H. VIDAL
Pryor Cashman LLP
1801 Century Park East, 24th Floor
Los Angeles, California 90067
For Defendant Kleinhendler:
STEPHEN M. FARACI, SR.
Whiteford, Taylor & Preston L.L.P.
1021 East Cary Street, Suite 1700
Richmond, Virginia 23219
For Defendant Wachtel Missry LLP:
ALBERT A. CIARDI, III
Ciardi Ciardi & Astin
1905 Spruce Street
Philadelphia, Pennsylvania 19103
BLOCK, Senior District Judge:
I previously ordered a new trial on the issue of Defendant Wachtel Missry
LLP’s (“Wachtel’s”) vicarious liability for the torts of Defendant Howard
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Kleinhendler. Applestein v. Kleinhendler, 2025 WL 1284273 (E.D.N.Y. May 2,
2025); see also Bivens v. Kleinhendler, 2025 WL 2085133 (E.D.N.Y. July 24,
2025) (reaffirming that new trial would be limited to vicarious liability and
declining to certify the issue for interlocutory appeal). I then denied Plaintiff’s
motion to enter a judgment against Kleinhendler only and scheduled the new trial
for February 2, 2026. See Minute Entry of (Sept. 17, 2025).
Sometime thereafter, Plaintiff and Wachtel settled their dispute for an
undisclosed amount. On January 2, 2026, they stipulated to a dismissal with
prejudice of all claims against Wachtel pursuant to Federal Rule of Civil Procedure
41(a)(1)(A)(ii). Although that rule requires “a stipulation of dismissal signed by all
parties who have appeared,” see id., Kleinhendler was not a party to the settlement
or to the stipulation.1
I did not immediately notice the error and so-ordered the stipulation on
January 5, 2026. Upon realizing that not all parties had signed the stipulation, I
held a status conference by telephone two days later. At that time, I informed the
parties that I had inadvertently met William Wachtel, the firm’s founding partner,
during the winter break:
I was down in Florida—I have a condo in Florida—and we have a
mutual friend. We had coffee together.
1Counsel for Plaintiff and Wachtel would be well-advised to check their
citations more carefully to avoid any suspicion of misleading the Court.
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I did not know anything about Mr. Wachtel’s involvement in this case
and he didn’t discuss it with me and I didn’t discuss it with him. But
he did tell me that there would probably not be a need for a retrial
because apparently there were plans to file a stipulation of
discontinuance, there was some agreement that was reached between
the parties. I have no idea what it was.
Tr. of Jan. 7, 2026, at 3. Turning to the stipulation, I expressed my concern that
Kleinhendler was not a party to it: “I need to hear from Mr. Kleinhendler’s
attorneys as to whether they understand that there’s nothing in the discontinuance
here that [a]ffects his rights and that he understands his obligations [and] that there
will be judgment.” Id. at 4. In response, Kleinhendler’s counsel raised two issues
that I had previously addressed in various trial and post-trial decisions. See id. at
6.2 In addition, his counsel asked for an opportunity to submit something “in
writing on the legal prejudice point” of Rule 41(a)(2), which permits court
approval of settlements signed by fewer than all parties. Id. at 5-6. Wachtel’s
counsel consented, with the caveat that he would have to discuss “some very
important confidentiality provisions” with his client before taking a position on the
merits.” Id. at 7-8.
Accordingly, I gave the parties two weeks to discuss the issue amongst
2Specifically, Kleinhendler’s counsel questioned whether judgment should
be entered at all “in light of the instructional issues that gave rise to the Court’s
order on the second trial,” and, if so, what the amount of the judgment should be
“in light of the verdict, [from] which, as you know, we’d like to strike various
claims.” Tr. of Jan. 7, 2026, at 6.
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themselves and to submit papers if they could not arrive at a mutually agreeable
resolution. See id. at 9-10. The parties were unable to reach an agreement. Having
reviewed their subsequent submissions, I can now make the following rulings.
1. 	Recusal
As an initial matter, Kleinhendler asks that I vacate the so-ordered
stipulation and hold everything else in abeyance pending a forthcoming “motion
asking this Court to disqualify itself in all further proceedings in this matter under
28 U.S.C. § 455(a).” Letter from Stephen M. Faraci, Sr. (Jan. 21, 2026) at 4. While
I claim no authority to prevent Kleinhendler from making that motion, nor do I see
any reason to delay the entry of judgment because of it.
Section 455(a) requires recusal “in any proceeding in which [the presiding
judge’s] impartiality might reasonably be questioned.” Partiality is to be evaluated
“on an objective basis” that asks “whether a reasonable person, knowing all the
facts, would conclude that the trial judge’s impartiality could reasonably be
questioned.” United States v. Rechnitz, 75 F.4th 131, 142–43 (2d Cir. 2023)
(cleaned up).
“The words [‘bias’ and ‘prejudice’] connote a favorable or unfavorable
disposition or opinion that is somehow wrongful or inappropriate.” Liteky v.
United States, 510 U.S. 540, 550 (1994). Under what has come to be known as the
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“extrajudicial source doctrine,” a judge’s opinion may be “wrongful or
inappropriate” if “it rests upon knowledge that [he or she] ought not to possess.”
Id.; see also id. at 554 (holding that the doctrine applies to recusal under § 455(a)).
I agree, of course, that I learned about the then-forthcoming settlement from an
extrajudicial source.
But in addition to coming from an extrajudicial source, the information must
“result in an opinion on the merits on some basis other than what the judge learned
from his participation in the case.” United States v. Grinnell Corp., 384 U.S. 563,
583 (1966). No reasonable person could conclude that learning nothing about the
settlement between Plaintiff and Wachtel except it was in the works led me to form
any opinion—let alone an unfavorable opinion—about Kleinhendler.
Moreover, “[t]he fact that an opinion held by a judge derives from a source
outside judicial proceedings is not . . . a sufficient condition for ‘bias or prejudice’
recusal, since some opinions acquired outside the context of judicial proceedings
(for example, the judge’s view of the law acquired in scholarly reading) will not
suffice.” Liteky, 510 U.S. at 550. While my conversation with William Wachtel
was hardly scholarly, it is nevertheless an insufficient basis for recusal. At this
stage of the proceedings, there is no judicial factfinding to be done. My only
remaining tasks are to determine whether dismissal of Plaintiff’s claims against
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Wachtel will cause Kleinhendler any legal prejudice, and whether there is any legal
basis for forestalling the entry of judgment on Plaintiff’s claims against him.
Such rulings “alone almost never constitute a valid basis for a bias or
partiality motion.” Id. at 555 (citing Grinnell, 384 U.S. at 583). My rulings may be
reversed on appeal, but I am confident that they will not be declared void ab initio
because of the appearance of partiality. In any event, I am prepared to take that risk
if it means bringing this case to a conclusion and sparing one of my colleagues the
trouble of bringing owls to Athens. See Aristophanes, The Birds 301-09 (G.
Murray, trans. 1950) (“Euelpides: And who to Athens brings an owl?”).
2. 	Dismissal of Wachtel
On the merits, Kleinhendler begins with the entirely moot point that the
stipulation between Plaintiff and Wachtel was not valid under Rule 41(a)(1)(A)(ii).
That is precisely what I told the parties on January 7th and precisely why I granted
Kleinhendler’s request for an opportunity to brief “the legal prejudice point” of
Rule 41(a)(2).3
3In addition to the requirement that all parties sign the stipulation of
dismissal, Rule 41(a)(1) might also be limited to dismissals of an entire case.
Compare Harvey Aluminum, Inc. v. Am. Cyanamid Co., 203 F.2d 105, 108 (2d Cir.
1953) “Rule 41(a)(1) provides for the voluntary dismissal of an ‘action’ not a
‘claim[.]’”), with Wakefield v. N. Telecom, Inc., 769 F.2d 109, 114 n.4 (2d Cir.
1985) (“[Harvey Aluminum] has been criticized and is now against the weight of
authority.”). Because Wakefield directed the dismissal of a single claim under
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Kleinhendler has used that opportunity to, among otherer things, give notice
of his
inten[t] to file a formal Motion to Vacate the Stipulation asking the
Court to vacate the Stipulation, order Plaintiffs and Wachtel to
disclose the full settlement agreement, and, should Plaintiffs again
seek leave to dismiss Wachtel, establish a briefing schedule that
allows Mr. Kleinhendler a full and fair opportunity to respond, as
appropriate.
Faraci Letter at 3-4. While I appreciate that Kleinhendler would very much like to
see the settlement agreement, his inability to do so does not deprive him of a “full
and fair opportunity to respond.” As he himself recognizes, “[u]nder Rule 41(a)(2),
the district court’s analysis is limited to analyzing whether the non-settling
defendant would suffer ‘legal prejudice.’” Id. at 3 (quoting New York v. De Blasio,
2025 WL 857338, at *2 (2d Cir. Mar. 19, 2025) (summary order)). But he puts the
closing quotation marks right before the important part: “The Court's authority
does not extend to approving, disapproving, or otherwise passing on the
substantive terms of a private settlement of private claims.” De Blasio, 2025 WL
857338, at *2[.]” Donziger, 2013 WL 1481813, at *4.
In other words, courts look for “legal prejudice” flowing from the dismissal
Rules 15 and 41(a)(2), see 769 F.2d at 114-15, I find it controlling here. Cf. Blaize-
Sampeur v. McDowell, 2007 WL 1958909, at *2 (E.D.N.Y. June 29, 2007)
(“District courts within the Second Circuit have since adopted the approach of the
majority of courts in other circuits—that is, that Rule 41(a) does not require
dismissal of the action in its entirety.”).
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of the settling parties’ claims, not from the terms of the settlement agreement. That
is because the dismissal is the only thing that requires court approval; Plaintiff and
Wachtel are free to agree between themselves as to any other matter. By the same
token, Kleinhendler and I, not being parties to the settlement agreement, are not
bound to it in the event of a remand.
3. 	Entry of Judgment against Kleinhendler
The “legal prejudice” that most commonly warrants denial of a stipulation of
dismissal pursuant to Rule 41(a)(2) concerns “the plight of a defendant who is
ready to pursue a claim against the plaintiff in the same action that the plaintiff is
seeking to have dismissed.” Camilli v. Grimes, 436 F.3d 120, 124 (2d Cir. 2006)
(citing Jones v. Sec. & Exch. Comm'n, 298 U.S. 1 (1936)). “Having been put to the
trouble of getting his counter case properly pleaded and ready, he may insist that
the cause proceed to a judgment.” Jones, 298 U.S. at 20 (quoting Skinner v. Eddy
Corp., 265 U.S. 86, 94 (1924)).
That concern is not present here because there are no pending counterclaims
or cross-claims. With respect to the latter, Kleinhendler—the sole active
tortfeasor—has a claim for neither indemnification nor contribution. See Glaser v.
M. Fortunoff of Westbury Corp.. 71 N.Y.2d 643, 646 (1988) (“[W]here one is held
liable solely on account of the negligence of another, indemnification, not
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contribution, principles apply to shift the entire liability to the one who was
negligent. Conversely, where a party is held liable at least partially because of its
own negligence, contribution against other culpable tort-feasors is the only
available remedy.” (cleaned up)). If by chance he does, he may pursue those claims
in a separate action.
Thus, the only impact of the settlement on Kleinhendler is that it reduces the
amount of compensatory damages that Plaintiff can recover from him. See Gerber
v. MTC Elec. Techs. Co., 329 F.3d 297, 303 (2d Cir. 2003) (“[T]his Circuit's ‘one
satisfaction’ rule . . . prohibits a plaintiff from recovering more than one
satisfaction for each injury.” (cleaned up)). Far from disputing this, Plaintiff has
agreed to “prepare a notice of partial satisfaction with the settlement amount
reached with Wachtel.” Letter from Thomas H. Vidal (Jan. 21, 2026) at 3. This
obviously enures to Kleinhendler’s benefit and thus does not prevent me from
entering a final judgment disposing of this case.
4. 	Conclusion
For the foregoing reasons, I will not vacate the so-ordered stipulation of
dismissal. I instead direct the Clerk of the Court to enter a judgment (1) dismissing
Wachtel from the case with prejudice and (2) providing that Plaintiff shall recover
from Kleinhendler $11,276,752.37 in compensatory damages, $15,000,000.00 in
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punitive damages, and post-judgment interest as provided by law.
Upon the entry of judgment, Plaintiff shall forthwith file a partial
satisfaction thereof in the total amount set forth in the settlement agreement
between her and Wachtel. In addition, Plaintiff shall not record the judgment in
any jurisdiction unless she contemporaneously records the partial satisfaction in
the same place. Failure to comply with these directives will, upon notice and an
opportunity for all parties to be heard, result in sanctions pursuant to my inherent
authority and/or relief from judgment pursuant to Federal Rule of Civil Procedure
60.
SO ORDERED.
_/S/ Frederic Block_____________
FREDERIC BLOCK
Senior United States District Judge
Brooklyn, New York
February 3, 2026
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