In Countryman v. Vialpando, 2022-cv-000008, District court of Nevada, the plaintiff failed to answer discovery or sit for his deposition. That was enough for the district court which dismissed his case pursuant to Rule 37(d). The case was dismissed even though the court had no entered a prior order requiring plaintiff to comply.
Rudy Giuliani Sanctioned Under Rule 37
Rudy Giuliani has been sanctioned under Rule 37 for numerous discovery violations in the Freeman v. Giuliani case. The Freeman case is a defamation case filed by Ruby Freeman, a Georgia election worker, who alleged that Giuliani defamed her in the press following the 2020 election. In July 2023, Giuliani conceded that he made false statements about the plaintiffs.
Rule 37 is used to obtain sanctions against parties that do not comply with discovery obligations. In Freeman, Giuliani was accused of failing to safeguard and produce electronically stored information (“ESI”). Under subsection (e) of Rule 37 a party is required to preserve ESI in anticipation of litigation. If a party fails to take reasonable steps to preserve the ESI, the opposing party may seek a variety of sanctions.
“Default judgment will be entered against Giuliani as a discovery sanction pursuant to Rules 37(e)(2)(C) and 37(b)(2)(a)(vi), holding him civilly liable on plaintiffs’ defamation, intentional infliction of emotional distress, civil conspiracy, and punitive damages claims, and Giuliani is directed to reimburse plaintiffs for attorneys’ fees and costs associated with the instant motion.”
Giuliani appears to have taken a strategic default and made a decision to withhold discovery materials. Given the amount of litigation against Giuliani it may be difficult for plaintiffs to collect from him.
Ed Clinton, Jr.
Dershowitz Sanctioned By Arizona District Court
On July 14, 2023, the District Court for Arizona issued an order denying Alan Dershowitz’ Application for an Order to Show Cause. The effect of this order is that Mr. Dershowitz was sanctioned by the district court for signing pleadings in the case captioned Kari Lake, et al. v. Adrian Fontes. No. 22-cv-00677-PHX-JJT. The plaintiff is a former candidate for governor of Arizona. The defendants are Maricopa county election officials.
The procedural history of the lawsuit is complicated. In April 2022, Lake filed suit against Maricopa County election officials to prohibit the use of electronic voting machines. The Court dismissed the case on August 22, 2022. Lake v. Hobbs, 623 F.Supp. 3d 1015 (D. Ariz. 2022). The Defendants moved for sanctions under Rule 11(b)(3). They “argued that Plaintiffs and their counsel made false allegations about Arizona elections in violation of Rule 11(b)(3) and brought this case for the improper purpose of ‘sowing doubts about the reliability and trustworthiness of elections for own financial and political benefit’ in violation of Rule 11(b)(1). Defendants further argued that the lawyers violated Rules 11(b)(2) and (3) and 28 U.S.C. § 1927. After briefing the court granted the motion and held that sanctions were warranted under Rule 11 and Section 1927. Dershowitz then filed an Application for Order to Show Cause to order the Maricopa Defendants to “show cause as to why an award of sanctions should be entered against Mr. Dershowitz personally or his consulting firm.” Dershowitz argued that his role in the matter was very limited and noted that he signed the complaint and first amended complaint as “of counsel.” Dershowitz argued that the words “of counsel” meant that his involvement was too limited for him to be sanctioned.
On May 20, 2022, the Maricopa Defendants sent Dershowitz and the other lawyers for Kari Lake a safe-harbor letter advising them that the Defendants believed the lawsuit was frivolous.
The District Court rejected Dershowitz’s argument that he did not violate Rule 11. To be sanctioned under Rule 11, the lawyer had to have signed the pleading. Here, Dershowitz signed both the original complaint and the amended complaint. By signing a complaint, the lawyer certifies that the filing is “not being presented for an improper purpose” and that the “legal contentions are warranted by existing law or by a non frivolous argument for extending, modifying, or reversing existing law or for establishing new law” and “the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.” Once the lawyer signs the pleading, Rule 11 applies even if the lawyer later withdraws from the case.
The District Court rejected the argument that Dershowitz had very limited involvement in the case because Dershowitz did sign the complaint and the amended complaint. The Court also rejected Dershowitz’s argument that he was listed as “of counsel” on the Complaint. “A contrary ruling here could diminish the significance of attorney signatures and cause courts to question whether they can be relied upon with confidence. If would offer safe harbor to attorneys who designate themselves ‘of counsel’ no matter the inadequacy of the filings they sign.” p. 23.
“Failing to impose meaningful sanctions here might very well encourage others to follow suit by lending their credibility to documents filed in court without facing any real consequence if their certifications prove hollow or incomplete. The need for general deterrence is therefore significant.” p. 25.
The Court upheld the Rule 11 sanctions and the 28 U.S.C. §1927 sanctions against Dershowitz. Because of his limited involvement, the court held that Dershowitz would only be held responsible for 10% of the attorney fee award in favor of the Defendants. Dershowitz has the right to appeal the decision and the Ninth Circuit may view matters differently.
Comment: the opinion is thoughtful and well-written. Generally, sanctions cases come down to a number of factors. In this case, the Defendants warned the lawyers that Defendants believed the lawsuit was frivolous and the lawyers did not heed those warnings. Additionally, I agree with the Court’s holding that listing a lawyer as “of counsel” should not give that lawyer a defense to sanctions litigation. The opinion also recognizes the limited role that Dershowitz played in the litigation and it reduces his portion of the attorney fee award. Increasingly, courts and attorney disciplinary bodies have been highly unsympathetic to lawyers who made false allegations about voting machines and the conduct of recent elections. Courts may regard these lawsuits as a threat to the fabric of democracy. Numerous lawyers for former President Trump have been sanctioned by courts and subjected to attorney disciplinary investigations.
Before you sign a complaint, consider whether you have a factual basis to claim that the allegations in the complaint are true. If you do not have any such basis, do not sign. Ask yourself “Is there evidence that voting machines miscount votes or favor candidates of one party over another party?” Is the evidence credible or is it merely conjecture?
Filing Complaint Without Authorization of Client Leads to Rule 11 Sanctions
In Edwards v. Wells Fargo Bank, 19-cv-14409 D. New Jersey January 5, 2003, the Court awarded Rule 11 sanctions against plaintiff’s counsel for failing to obtain the authorization of his client before filing the case. At a hearing the lawyer conceded that he lacked authorization to file the case. It is difficult for me to comprehend the court’s rulings. The pertinent parts of the ruling are quoted below:
WHEREAS, the Court held a hearing on the Order to Show Cause on July 7, 2021, with both Thomas and Edwards in attendance, (ECF No. 29), and where Thomas conceded on the Record that Edwards had not hired him to bring this case and that in fact Thomas had never met Edwards prior to the Order to Show Cause hearing on July 7, 2021, (ECF No. 38 at 23:22-23); and
WHEREAS, the Court noticed Thomas at both the hearing and in the Order issued on July 8, 2021 that the Court was contemplating sanctions under Rule 11 of the Federal Rules of Civil Procedure and the Rules of Professional Conduct and gave Thomas a second chance to Show Cause to the Court; and
WHEREAS, Thomas received two extensions and nearly two months of time to prepare his second response to the July 8, 2021 Order to Show Cause (ECF Nos. 30, 31, 32, 33, 34, 36, 37); and
WHEREAS, the Court found Thomas’ explanations as to why this case was brought under Edwards’ name were insufficient, (ECF No. 39); and
WHEREAS, the Court found that Thomas was not authorized by Edwards to bring this action, (ECF No. 39 at 34-35); and…
WHEREAS, the Court found that Thomas filed and pursued this lawsuit for improper purposes, violating Federal Rule of Civil Procedure 11(b)(1), (among other violations) (ECF No. 39 at 20-21)[2] (“the Court is unable to conceive of any proper basis Thomas could have had for filing this Complaint”) (emphasis in original); and
WHEREAS, with the Court finding a violation of Rule 11(b)(1), the case was brought improperly ab initio, without Edwards’ knowledge or consent;
Spoliation Claim Fails Where The Evidence Was Lost Before Suit Was Filed
In Ansley v. Wetzel, 21 cv 528 M.D. Pennsylvania, the plaintiff filed suit against prison guards for violations of his civil rights. Plaintiff sought to obtain video evidence of the incident but the video was lost. He moved for sanctions under 37, but his motion was denied because the tapes of the incident were lost prior to suit being filed.
The Defendants argued that there was no spoliation because they had no reason to retain the tapes because there was no use of force. The District court agreed with their argument:
Defendants submitted the declarations of Captain Jeffrey Madden and Captain Robert Bookheimer wherein they explain when video footage is retained at state correctional institutions. (Doc. 91-2 at 10-11, Madden Declaration ¶¶ 3-4; Doc. 91-2 at 12-13, Bookheimer Declaration ¶ 3). Captain Madden explained that video footage is typically recorded over when a camera’s memory capacity has been met, unless the video involved a planned or unplanned use of force. (Doc. 91-2 at 10-11, Madden Decl. ¶¶ 3-4). Captain Bookheimer further declared that video footage of an inmate’s escort to the RHU is generally not retained, unless in the event of an extraordinary occurrence report or other event deemed necessary by the Facility Manager. (Doc. 91-2 at 12-13, Bookheimer Decl. ¶ 3). The video footage at issue was not retained because the incidents did not involve either a planned or unplanned use of force, and there is no evidence that Ansley’s escort to the RHU involved an event triggering retention of the video.
“When a party argues that spoliation occurred before the complaint was filed, the court must conduct a fact-sensitive inquiry to determine at what point the spoliating party reasonably should have anticipated the litigation.” Bistrian, 448 F. Supp. 3d at 468. Ansley states that defendants should have been aware of impending litigation based on two grievances he filed on October 9, 2020, related to a “rape plot” fabricated by defendants. (Doc. 89 at 10; Doc. 89-1 at 38). However, the filing of these grievances does not support a pre-litigation duty to preserve recordings. Such an obligation arises when a party reasonably should have anticipated litigation concerning the grieved incidents. Bistrian, 448 F. Supp. 3d at 468 (“A party `is under a duty to preserve what it knows, or reasonably should know, will likely be requested in reasonably foreseeable litigation.”). Based on the filing of grievances related to a rape plot, defendants could not have reasonably anticipated litigation concerning the escort to the RHU on June 25, 2020, an incident involving masturbation on January 10, 2021, and the escort to the psychiatric observation cell on March 18, 2021. Because defendants could not reasonably foresee litigation and appreciate that the video footage at issue should be preserved for possible use in that litigation, they were not under a duty to preserve the video footage.
Conclusion: there as no duty to preserve evidence under Rule 37(e) before the lawsuit was brought.
Ed Clinton, Jr.
Failing to File Separate Motion for Sanctions Fatal to Sanctions Claim
The Rule 11 safe harbor provision requires a party seeking sanctions to file a separate motion for sanctions. Here, the party seeking sanctions combined the request for sanctions with a motion to dismiss. Result: sanctions denied. In Hison v. Lloyd, No. 22-10943 (E.D. Mich. 2023), the court ruled as follows:
“The Court denies Defendants’ request for sanctions under Fed. R. Civ. P. 11 because Defendants failed to strictly comply with Rule 11’s “safe-harbor provision” which states as follows:
A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b). The motion must be served under Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets.
Fed. R. Civ. P. 11(c)(2) (emphasis added). Thus, Rule 11 expressly requires that a “motion for sanctions must be made separately from any other motion.” Fed. R. Civ. P. 11(c)(2). Here, however, Defendants combined their motion seeking Rule 11 sanctions with their Motion to Dismiss. As such, Defendants failed to strictly comply with Rule 11’s safe-harbor provision and that failure “precludes imposing sanctions on [Defendant]’s motion.” Penn, LLC v. Prosper Business Dev. Corp.,773 F.3d 764,767 (6th Cir. 2014).”
Comment: failing to follow the rule gives the district court an easy way to avoid spending time on a sanctions motion.
No Rule 11 Sanctions Where Lawyers Had Reasonable Basis To Make Alter Ego Claim
In Jingdong Logistics United States Company v. Ready Acquisition, Inc, Case No. 5:22-cv-01018-ODW (SHKx), Central District of California, plaintiff alleged that Ready Acquisition was the alter ego of its two owners. The owners alleged that the allegations were baseless and sought Rule 11 sanctions. The court denied sanctions by reasoning that there was an adequate factual and legal basis for the alter ego claim.
Here, the Court finds that the alter ego allegations in Jingdong’s Complaint were neither factually nor legally baseless “at the time that the position [was] adopted,” that is, at the time Jingdong filed its Complaint. Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1538 (9th Cir. 1986). In reaching this conclusion, the Court “avoid[s] using the wisdom of hindsight,” limiting its inquiry to whether a reasonable basis for alter ego allegations existed at the time the Complaint was filed, regardless of what Jingdong learned or discovered after it filed the Complaint. Id. at 1537 (quoting Fed. R. Civ. P. 11 advisory committee’s note to 1983 amendment).
Prior to filing the Complaint, Jingdong’s attorneys investigated Ready Acquisition by sending a field agent to Ready Acquisition’s registered principal office address and to Lawrance’s personal address. (See Decl. Sijiu Ren ISO Opp’n (“Ren Decl.”) ¶¶ 3-5, ECF No. 22-1.) In so doing, Jingdong discovered that (1) Ready Acquisition’s office was occupied by new tenants, and that (2) packages addressed to Ready Acquisition were located on the front porch of Lawrance’s residence. (Id.; Decl. Greg Lawrance ISO Reply (“Lawrance Decl.”) ¶¶ 6-7, ECF No. 28.) Jingdong’s attorneys conducted additional research and determined that Ready Acquisition’s business status in the State of New Hampshire was “Not In Good Standing.” (Ren Decl. Ex. A (“Business Information Inquiry”), ECF No. 22-2; Ren Decl. ¶ 6.) These discoveries provided Jingdong’s counsel with a reasonable factual basis for including alter ego allegations against Lawrance and Gunter in Jingdong’s Complaint.
Lawrance and Gunter argue otherwise, pointing to facts and developments that occurred after Jingdong filed its Complaint, (Mot. 6-8), but these facts are not relevant to whether the Court should sanction Jingdong for allegations made in the Complaint. Fed. R. Civ. P. 11(b); Golden Eagle, 801 F.2d at 1538.
Lawrance and Gunter further argue that Jingdong is withholding $400,000 of Ready Acquisition’s inventory and thus contributing to the very insolvency Jingdong alleges supports alter ego liability. (Reply 5.) This argument is not well taken because there is no actual evidence of a causal link between Jingdong’s withholding of inventory and Ready Acquisition’s purported insolvency; and in any case, this attack on one component of Jingdong’s alter ego theory, even if successful, would not render the alter ego theory factually or legally baseless.
The court also held that the legal theory did not merit sanctions either.
Comment: Plaintiff did an extensive investigation of the facts before it brought the alter ego claim. That investigation and the facts that were discovered was a sufficient basis to bring an alter ego claim.
File A Dispositive Motion Before Seeking Rule 11 Sanctions
If you read a complaint and develop the conviction that the complaint is frivolous or otherwise supports a sanctions claim, don’t rush to seek sanctions. Seek dismissal first. Then, if successful, seek sanctions. Otherwise the court will deny the sanctions motion without giving it any consideration.
Defendant argues that sanctions are appropriate because “Plaintiff’s complaint is meritless and subject to dismissal under Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure.” Defendant has failed, however, to move for relief under Rules 12(b)(1) or 12(b)(6). In light of Defendant’s failure to move for relief under these Rules or otherwise challenge the viability of Plaintiff’s claims, the Court finds that Defendant’s motion for Rule 11 sanctions is improper and premature. See, e.g., Dobronski v. Alarm Management II L.L.C., 2019 WL 1232690 at *2 (E.D. Mich., Mar. 18, 2019) (a Rule 11 motion for sanctions is not an appropriate substitute for a properly filed motion under Rule 12 or Rule 56); Almeida v. Bennet Auto Supply, Inc., 335 F.R.D. 463, 466 (S.D. Fla. 2020) (where defendant claims that the institution of a lawsuit was improper, a determination as to the propriety of Rule 11 sanctions cannot be made until the conclusion of the case); United Specialty Ins. Co. v. Dorn Homes Inc., 2020 WL 8416010 at *3 (D. Ariz., Jan. 9, 2020) (same); Mouzin Brothers Farms, LLC v. Dowdy, 2022 WL 16841583 at *1 (M.D. Ga., Nov. 9, 2022) (same). Accordingly, the undersigned recommends that Defendant’s motion be denied without prejudice.
Jaiyeola v. Bryan, 22 CV 844 W.D. Michigan, Southern Division.
Ed Clinton, Jr.
That Will Cost You $50,000.
Trump v. Clinton is a purported RICO lawsuit filed by Trump attorneys against Hillary Clinton (who lost the 2016 Presidential Election) and a number of other defendants. It was dismissed with prejudice two months ago. One of the defendants, Charles Dolan, filed a motion for Rule 11 sanctions. The district court granted the motion with some stern words for Trump’s lawyers. Dolan was a mere volunteer for the Clinton campaign and did not have the roles that the complaint, and the amended complaint, alleged that he had.
The Court found that the allegations that Mr. Dolan was involved in a conspiracy to harm Donald Trump or his campaign were false and reckless. The court noted that the lawyers for Dolan sent a detailed warning letter to the attorneys for Trump explaining the various flaws with the Complaint. Instead of taking the letter seriously, the lawyers made a few cosmetic changes and filed an Amended Complaint. The court’s discussion of the Rule 11 warning letter is instructive:
The Warning Letter.
On May 31, 2022, counsel for Mr. Dolan wrote the attorneys for Mr. Trump. They warned:
1. That Mr. Dolan had no role in any conspiracy related to the Steele dossier.
2. That Mr. Dolan was not a source for the allegations of sexual activity.
3. That Mr. Dolan had not been in contact with any defendant other than Igor Danchenko, and that Mr. Dolan’s contacts with Mr. Danchenko involved business interests and help for a conference in Moscow.
4. That Mr. Dolan had never been chairman of the DNC.
5. That Ms. Clinton was on record through a spokesperson as stating she had no recollection of Mr. Dolan.
(DE 268-1).
The court then noted that the Amended Complaint did not make material changes to the allegations against Dolan. Dolan moved for sanctions. The explanation for the decision to grant sanctions is well-written.
Rule 11 sanctions are properly assessed (1) when a party files a pleading that has no reasonable factual basis; (2) when the party files a pleading that is based on a legal theory that has no reasonable chance of success and that cannot be advanced as a reasonable argument to change existing law; or (3) when the party files a pleading in bad faith for an improper purpose. Massengale v. Ray, 267 F.3d 1298, 1301 (11th Cir. 2001) (citing Worldwide Primates, Inc. v. McGreal, 87 F.3d 1252, 1254 (11th Cir. 1996)).
Here, all three are true. In Section A of this Order, I explain why the Amended Complaint lacked a reasonable factual basis as to the allegations against Defendant Dolan. Then, in Section B, I explain why Plaintiff’s legal arguments contained no reasonable chance of success. I have already done so, at great length and in great detail, in my Order granting Defendants’ Motion to Dismiss. But I reiterate those fatal flaws here as relevant to the distinct Rule 11 inquiry. Finally, in Section C, I find that Plaintiff filed his pleadings for an improper purpose.
The order contains a lengthy discussion of the merits of the legal theories in the Complaint as additional bases for sanctions. The court ordered the lawyers for Trump to deposit $50,000 with the Court and pay Mr. Dolan’s legal fees in connection with the motion.
Comment: this is an example where the lawyer failed to conduct due diligence before making claims that were either false or baseless. Even after receiving a Rule 11 warning letter, the lawyers (at least according to the Court) failed to take any measures to correct the problems with the Complaint. Rule 11 requires due diligence and no lawyer should ever sign a pleading without doing that hard work. Don’t sign because the boss tells you to sign. Don’t sign to curry favor. Sign if the allegations are true and well-researched. In the end of the opinion, the Court indicated that other sanctions might be forthcoming.
Note: my apologies for the formatting issues that made the original post impossible to read.
Ed Clinton, Jr.
Six Years Of Frivolous Litigation Equals Rule 11 Sanctions
A Michigan district court found that a plaintiff who had spent six years challenging zoning regulations was liable for Rule 11 sanctions.
After conducting a de novo review of the R & R, the objections, and the pertinent portions of the record, the Court finds that Plaintiff’s objections are without merit and that the R & R should be adopted. As stated by the Magistrate Judge, there is “nothing reasonable about Plaintiff’s conduct in this matter” (ECF No. 53 at PageID.603). Over the past six years, Plaintiff has unsuccessfully challenged Marshall Township’s efforts to enforce zoning regulations in both federal and state court. The claims in the present case were not discernable. The Court agrees with the Magistrate Judge’s conclusion that the “imposition of Rule 11 sanctions is both appropriate and necessary to deter Plaintiff and others from wasting this Court’s limited resources and subjecting future litigants to similar behavior” (id.). Plaintiff’s argument fails to demonstrate any factual or legal error in the Magistrate Judge’s analysis.
Plaintiff argues that his claims and pleadings were not frivolous in this case. He contends that the Court permitted him to “e-file” his pleadings, “proving that Plaintiff’s pleadings were not considered `frivolous’ at that time” (ECF No. 54 at PageID.607). He further argues that if the pleadings were frivolous, “why has [he] not been charged with perjury” (id. at PageID.607).
Cousino v. Township of Marshall, 21-cv-679 (W.D. Michigan 2022). The current case has been pending since 2021 so the “six years” the court is referring to must mean other litigation. I’m not sure that is a proper basis for awarding sanctions in the above-captioned case. The court does not mention a false allegation in its opinion.
Ed Clinton, Jr.
fedcivilprocedure 