| To: | Libertarian Party |
| From: | Bill Hall |
| Date: | June 29, 2000 |
| Re: | Facts Surrounding Lawsuit by Libertarian National Committee Against Gene Cisewski, The Liberty Council and Monticello Group, Inc. |
As noted in the complaint filed in the lawsuit against Cisewski, the Libertarian Party has spent more than a million dollars over many years, more than $500,000 in the past 3 years alone, building a database of the names and addresses of more than 200,000 members, contributors and interested parties. While the value of the mailing list is primarily for internal use, occasionally we rent all or part of the list to others, provided they agree to: (1) use the list only once, and keep it confidential; (2) allow us to pre-approve the content of all mailings to our list; and (3) only mail on a date pre-approved by us. These requirements are embodied in written agreements, and are designed to preserve the value of the list for our internal use. Prior to 1997, a user of our list violated its agreement by sending a mailing not pre-approved by us, so we banned that user from ever renting our list again. In other words, our policy was to give no second chances to persons who misused our list.
In dealing with Gene Cisewski we broke this rule. Gene Cisewski was a political consultant to Libertarian candidates and organizations, and his livelihood depended in part on being able to rent our mailing list. In 1997, and until the July, 1998, national convention, he was a member of the Libertarian National Committee, and thus in a trusted position within the Libertarian Party. As noted below, he violated our mailing list policies a number of times. We suspected for some time that he was misusing our list. However, we gave him every benefit of the doubt, until we caught him red-handed. Even then, the LNC filed suit against Gene Cisewski only afier many attempts to work out the dispute voluntarily, and on an amicable basis, failed.
Some people have suggested that the dispute should have been submitted to arbitration. However, it takes the agreement and cooperation of both parties to submit a matter to binding arbitration. As noted below, prior to and during the course of the lawsuit, Cisewski repeatedly broke his promises to us as to what he would do and when he would do it. I believe the primary reason the matter was ever resolved was that Cisewski faced the threat that the Court would find him in contempt if he too blatantly violated its rules. Under these circumstances, arbitration would have been a waste of time.
The LNC asked that I prepare this memo in order to outline the facts behind this sorry state of affairs.
| 1997 | The Monticello Group handled the first mailing to the Libertarian Party mailing list for the Murray Sabrin for Governor campaign. Despite a signed agreement with the candidate, a copy ofthe list was retained, and used again twice. Neither the reuse nor the copy were pre-approved, as required by the contract, though the campaign later did pay for the unauthorized uses. Despite verbal instructions to and agreement with the mail house, the disks containing the list were returned to Monticello Group instead of LPHQ. |
| Fall 1997 | The Liberty Council made a mailing to Libertarian Party members which appeared to use the LP mailing list. Several LP members contacted LPHQ and inquired as to why the LP was sending them the Liberty Council mailing, and at least one (Bruce Hoepner of Michigan) insisted that only the LP had the particular address at which that member received the Liberty Council mailing. Persons who were on the LP mailing list with "do not mail" flags (e.g., Steve Dasbach and Joe Hauptmann of Indiana) did not receive the mailing, even though their names were on other libertarian-oriented mailing lists. |
| Fall 1997 | In response to the Liberty Council mailing, Ron Crickenberger contacted Cisewski and asked whether he mistakenly made a mailing to the LP mailing list. Cisewski insisted he had not. |
| Fall 1997 | In reaction to the building circumstantial evidence that Gene Cisewski was misusing the LP mailing list, and as a general exercise of caution with a valuable asset, the LP list was "seeded" with a few fictitious names, at addresses of persons associated with LPHQ. |
| 11-12/97 | The Monticello Group handled a prospecting mailing for the Institute for Humane Studies. For this mailing, copy was submitted for approval, as agreed by Gene Cisewski in a letter dated November 24, 1997. But the Monticello Group then used two different letters, one of which was not pre-approved, and expressly appealed to the recipient's connection to the LP. This time, even with written instructions to the mailhouse, and a follow up phone call to confirm this, the disks containing the mailing list were mysteriously returned to the Monticello Group, and not LPHQ. |
| 12/13/97 | Gene Cisewski is publicly confronted at the LNC meeting in Washington, DC, regarding the Sabrin mailings. He swears that he was not deliberately misusing the LP mailing list, and that the unauthorized uses were unintended oversights or miscommunications. |
| Early 1998 | The Monticello Group worked for the Steve Kubby for Governor campaign. At a time when the Kubby Campaign had not rented the LP mailing list, a mailing (confirmed by Jackie Bradbury, as being approximately 5,000 California recipients, the same size as the number of California addressees on the LP mailing list) was sent to LP members, and at least one (Aaron Starr of California) insisted that only the LPHQ had the particular address at which he received the Kubby campaign mailing. |
| 1998 | Liberty Council makes a mailing (Cisewski tells BetteRose Smith, to a list of more than 500 in Colorado) promoting his Colorado Victory 2000 seminar. It is received by a number of people who believe their names only appear on the LP mailing list, and the state chair, who believes only LPHQ has the address at which she received the mailing. |
| 9-10/98 | One of our mailing list seeds ("Robert Johnson" - alias LPHQ employee and DCLP Chair Daniel Smith) receives a mailing from the Liberty Council, providing conclusive evidence of what we had suspected for quite some time, that Cisewski had copied and was using our mailing list. The "Robert Johnson" name was never used by Smith for any other reason, other than as an LPHQ "seed." |
| 11/3/98 | We hire independent counsel in Washington, DC, Doug Herbert (recommended by Clint Bolick of the Institute for Justice), to evaluate our claim. He concludes we have a good case against Cisewski for misappropriation of our mailing list. |
| 11/17/98 | Herbert writes Cisewski, setting forth the circumstantial evidence, and proposing that Cisewski, Herbert and Crickenberger meet so Cisewski can explain how it might have happened. Herbert proposes several dates through 12/1/98. Cisewski fails to respond. |
| 12/1/98 | Herbert leaves voice message for Cisewski, asking why no response, and stating that if no response is received by end of the day, Herbert will assume Cisewski has no desire to meet. |
| 12/1/98 | Cisewski calls Herbert, saying he sent a response letter yesterday, and promising to meet once Herbert had responded to his letter. |
| 12/1/98 | Herbert receives Cisewski's letter, which denies any wrongdoing, claims any mailing by him to a "seed" is either due to the LNC's incompetence in maintaining its "seeds" or fabricated for political reasons. Cisewski gives no further explanation for the "seed". Cisewski asks that we turn over all evidence of the "seed" so he can investigate the situation. |
| 12/2/98 | Herbert writes Cisewski, suggesting available dates for a meeting prior to the 12/12/98 LNC meeting, at which the parties will disclose their documents and files to one another. |
| 12/11/98 | Cisewski writes Herbert, refusing to meet and stating that he is retaining counsel, who should be contacting Herbert within the next week or so. Neither Cisewski nor an attorney representing him responds. |
| 12/12/98 | LNC votes unanimously to file suit against Cisewski if further efforts toward voluntary settlement fail. |
| 2/12/99 | We file suit against Cisewski in Washington DC Superior Court for breach of fiduciary duty, fraud, breach of contract and misappropriation of a trade secret. |
| 2/17/99 | Copy of lawsuit served on Cisewski. Under the Court rules, Cisewski must file an answer by 3/9/99. |
| 3/3/99 | Herbert files requests that Cisewski produce documents and answer written questions with respect to the factual background surrounding the lawsuit. Under the Court rules, Cisewski must respond by 4/5/99. |
| 3/9/99 | Cisewski fails to file an answer to our lawsuit. Instead, he files a motion with the Court requesting a 30 day extension to file an answer. His request violates the Court rule which says a 20 day extension may be given, if he first contacts us and we agree. We decide to take it easy on him and not to respond, effectively giving him the requested 30 day extension. |
| 3/22/99 | Cisewski and Dasbach meet for lunch, to try to resolve the matter. Cisewski denies any wrongdoing and promises to provide relevant information. Dasbach makes no promises regarding lawsuit. |
| 3/30/99 | Cisewski writes Dasbach, enclosing two invoices he says were from mailing house for Liberty Council mailing which included "seed." [and thus, he claims, evidence of size of mailing made.] |
| 4/5/99 | Cisewski fails to respond to requests for documents and information, as required by Court rules. |
| 4/8/99 | Cisewski fails to file an answer to our complaint, as he promised. We decide to give him further time to respond by delaying action to enter a default judgment. |
| 4/22/99 | Herbert writes Cisewski, advising him we will ask the Court to enter a default judgment against him because he failed to answer, and an order compelling him to answer our requests for documents and information. |
| 5/3/99 | Herbert is contacted by Bruce Godfrey, a Maryland attorney who claims he is 'about to be hired' by Cisewski, and requests a one week extension to file an answer to our complaint and provide the documents and information requested. We grant his request. |
| 5/10/99 | Godfrey fails to file the answer or provide the documents and information, as promised. |
| 5/11/99 | Godfrey calls and says he will file the answer 'right away' and asks for a 3 week extension to respond to requests for documents and information. |
| 5/12/99 | Godfrey faxes to Herbert a 'draft' answer and writes that it will be signed and delivered at the initial conference with the Judge on May 14. |
| 5/13/99 | Herbert writes Godfrey, agreeing to the requested extension (until 6/1/99) to provide documents and information. |
| 5/14/99 | At the initial conference, the Judge had clearly read the file and pleadings (usually not the case), asked why Cisewski failed to answer (was told answer was filed that morning). Set a schedule for completion of discovery by 9/14/99, filing of all dispositive motions by 10/29/99 and a trial in 2 or 3/2000. Godfrey agrees informally that he will 'beat' the 6/1/99 deadline for providing documents and information. [Answer filed varied materially from 'draft' provided on 5/12/99 by Godfrey, which Godfrey represented to be 'the answer.'] |
| 6/1/99 | Godfrey fails to respond to requests for documents and information, as promised. |
| 6/4/99 | Herbert's associate, Mary Chlopecki, calls Godfrey for an explanation. He first claims Cisewski was out of town, causing a delay. Next he claimed the responses were drafted, but just not signed by Cisewski. Finally, he claimed he would draft the responses soon. Godfrey agrees to meet with Herbert for a discovery conference (required by Court rule before we could ask the Court to compel production of documents and information) on 6/9/99, at which he promises he will produce the requested documents and information. |
| 6/9/99 | Godfrey calls Herbert, asking to postpone meeting he promised for several days. Says Cisewski only gave him documents and information the night before, at 9p.m., Godfrey stayed up all night working with them, and is so sleepy he is afraid to drive to Herbert's office. Herbert insists on meeting 6/10/99. |
| 6/10/99 | Godfrey delivers largely incomplete and unresponsive responses to our requests for documents and information. At the same time, he serves requests for documents and information which go far beyond the scope of the lawsuit, specifically seeking information regarding details of the Archimedes project, contractual and other "self-dealing" relationships between the LNC and Harry Browne and officers, employees, volunteers and members of the LNC. Herbert and Godfrey discuss and agree in principle on a 'deal' which would permit both parties full access to the other's documents. |
| 6/29/99 | Herbert and Godfrey talk, fleshing out the 'deal' as one which would limit disclosure of all documents deemed confidential by the parties to their attorneys (specifically including any information regarding the income and expenditures of Cisewski, Monticello Group and Liberty Council), and would permit the attorneys for each party to visit the offices of the other, and review all relevant documents. Herbert writes Godfrey, proposing a form of protective order to be entered by the Court, which will implement the deal. |
| 6/30/99 | Godfrey agrees to protective order in principle, and asks Herbert to revise the form provided to apply to our situation. |
| 7/99 | Cisewski sends a memo to the LNC, denying any wrongdoing and proposing that the dispute be submitted to binding arbitration. We do not accept his offer, viewing it as yet another stall tactic, and a ploy to avoid the production by him of any documents or other evidence. Unlike a lawsuit, arbitration would not require that he provide those documents or evidence. |
| 7/14/99 | Herbert subpoenas relevant documents from Cisewski's mailing house, and schedules deposition of mailing house employee for 8/25/99. Herbert schedules deposition of Cisewski for 8/31/99. |
| 7/20/99 | Herbert writes Godfrey, enclosing protective order agreement for Godfrey's review and signature by Cisewski. [To address Cisewski's claim that we might review his records, and then somehow pick a person in his database and claim that person is the "seed," we agreed to place the "seed's" name in a sealed envelope for signature by Godfrey when Herbert arrives to review Cisewski's database. We will then retain the sealed envelope until we are required to respond to Cisewski's request for documents and information on 8/27/99.] |
| 7/23/99 | Godfrey calls Herbert, saying Cisewski will sign protective order agreement, but needs 'a few days' to gather documents. |
| 7/26/99 | Herbert calls Godfrey to coordinate signing, and Godfrey tells Herbert Cisewski changed his mind, and plans to produce copies of documents withheld instead (even though request for information requires review of databases). |
| 8/2/99 | Godfrey calls Herbert and advises Herbert that Godfrey persuaded Cisewski to sign protective order agreement. Herbert scheduled to visit Cisewski's office and review documents on 8/11/99. |
| 8/3/99 | Herbert receives from Godfrey copies of some requested documents, and the signed protective order agreement. As requested by Godfrey, Herbert files motion to add Bill Hall as counsel to case, so Hall will be bound by confidentiality provisions of protective order agreement. We agree, as a gesture of goodwill, to expedite provision of some ofthe documents and information requested of the LNC, by delivering those early, on or before 8/11/99. |
| 8/10/99 | Godfrey calls Chlopecki and advises Chlopecki that Cisewski left a message for Godfrey that Cisewski is ill, and thus Herbert's scheduled visit Cisewski's office to review documents on 8/11/99 must be canceled. |
| 8/11/99 | Herbert calls Godfrey and Godfrey advises that Cisewski will not produce the documents. Godfrey suggests that the only way Cisewski will comply is if Herbert obtains a Court order to compel Cisewski to comply with our request for information and documents. Herbert is reluctant to do so, absent a final attempt to reschedule his visit to Cisewski's office. Herbert insists that Godfrey ask to reschedule his visit to Cisewski's office for 8/12/99. Godfrey leaves a message in response, saying Cisewski says his Doctor says the meeting must be on Monday, 8/16/99 (a date which Cisewski knows Herbert is on a one week vacation). Herbert is reluctant to agree to 8/16/99 because he does not want to cancel his vacation, and though he could send Chlopecki, she is not computer literate enough to tell if Cisewski is providing free access to his computer records. |
| 8/12/99 | Herbert contacts Godfrey, suggesting rescheduling for Wednesday, 8/18/99, when Chlopecki and Herbert's computer literate son can make the visit. Godfrey says no, but agrees to reschedule document production for 8/23/99, when Herbert is available. |
| 8/23/99 | Cisewski cancels document production. Eventually, Cisewski agrees to document production. Upon visiting Cisewski's apartment to view documents, Cisewski advises him that his computer recently crashed, destroying all relevant e-mail messages and data other than a small mailing list which does not contain the "seed." In addition, Cisewski reveals that he has, as a matter of standard practice, destroyed virtually all written records for years prior to 1999. |
| 8/25/99 | Chlopecki deposes employee of mailing house, CSI, who denies any memory of anything. CSI produces four invoices in response to subpoena, none of which match the invoices provided by Cisewski in April, as those for the Liberty Council mailing. |
| 8/31-9/2/99 | Herbert questions Cisewski under oath. Cisewski is unable to explain how the "seed" received the Liberty Council mailing. He speculates it must be part of a conspiracy against him. Under the terms of the protective order and later settlement agreement, Cisewski requires that parts of the deposition [matters relating to his personal finances] be sealed. |
| Fall 1999 | Discovery period ends without Cisewski or Godfrey ever having exercised their rights to view LNC records or question LPHQ employees. The parties await trial in the Spring of 2000. |
| 9/99-3/00 | We propose a settlement, which after long delays, Cisewski accepts in principle. However, prior to signature Cisewski backs out a number of times, but finally signs on terms virtually identical to those proposed by us in the Fall of 1999. |
| 3/00 | The Court enters an order approving a settlement agreement in which we and Cisewski agree: |
| 1. Cisewski, Monticello Group and Liberty Council (collectively, "Defendants") admit they breached their contract for LNC mailing list use by reusing the mailing list. | |
| 2. The lawsuit was conducted in a procedurally fair manner and they have not been coerced or intimidated into the settlement. | |
| 3. Defendants will never again use the LNC mailing list. | |
| 4. Defendants may work with Libertarian candidates and state parties, but any LP mailing list use for them must be controlled by LPHQ or designated mailing houses. | |
| 5. Defendants will pay $1,000 in damages now and $10,000 five years from now. | |
| 6. Defendants will pay $25,000 in damages if they misuse the mailing list again, or breach the terms of the settlement. |
All told, the LNC paid $48,440.43 to Herbert for the legal services he provided. We feel that he did a fine job handling the lawsuit. While if we had known pursuing the matter would have cost so much we might have acted differently (perhaps, by taking a harder line with Cisewski, rather than bending over backward at every turn to give him the benefit of the doubt), we did accomplish our primary purposes of: (1) obtaining a permanent injunction against any further use of the LP mailing list by Cisewski; (2) obtaining an admission that Cisewski did misuse the mailing list; and (3) establishing severe sanctions against any future misuse by Cisewski.