Month: September 2017

Nonparty Cannot File Rule 11 Motion

This seems rather obvious. The explanation:

Tokayer asserts that sanctions pursuant to Fed.R.Civ.P. 11 should be imposed on the Nimkoff Parties and their attorneys for filing several “baseless” motions against Tokayer and for filing a lawsuit against Tokayer that has been dismissed (Tokayer Motion at 4).

As an initial matter, Tokayer, as a non-party, lacks standing to seek Rule 11 sanctions in this action. See New York News, Inc. v. Kheel, 972 F.2d 482, 486 (2d Cir. 1992) (non-party attorney did not have right to intervene in action for purpose of seeking Rule 11 sanctions).

The third party, Tokayer, also failed to comply with the safe harbor. Source: NIMKOFF ROSENFELD & SCHECHTER, LLP v. RKO PROPERTIES, LTD., Dist. Court, SD New York 2017 – Google Scholar

District Court Remands Attorney’s Attempt to Move Discipline Case To Federal District Court

This case deals with the somewhat tricky rules of federal jurisdiction in the unusual context of a lawyer disciplinary proceeding. Lawyer discipline cases are creatures of state law. In Maryland, the case is heard by a trial court. Either party (the lawyer or the administrator) can then appeal to the Maryland Court of Appeals, which has final say on all attorney discipline issues.

Here, the lawyer attempted to remove the lawyer discipline case to federal court. The district court remanded the case to Maryland. The lawyer then made a second attempt at removal, this time arguing a different basis for federal jurisdiction. The district court again remanded the disciplinary case to the Maryland courts.

The court summarizes the procedural history of the case in this way:

This Court has previously granted a Motion to Remand in this case. Attorney Grievance Commission of Maryland v. Rheinstein, Civ. No. MJG-16-1591, ECF No. 30 (Mar. 17, 2017) (“First Remand Order”). Defendant alleges that the existence of new facts warrant the filing of a successive Notice of Removal.

The underlying cause of action remains the same. On February 17, 2016 the Attorney Grievance Commission of Maryland (“AGC”) filed, in the Maryland Court of Appeals, a Petition for Disciplinary of Remedial Actions against Jason Edward Rheinstein (“Rheinstein”). On February 19, 2016, the Court of Appeals of Maryland transmitted the Petition to the Circuit Court for Anne Arundel County to hold a judicial hearing pursuant to Maryland Rule 16-757.

On May 23, 2016, Rheinstein filed his first Notice of Removal, contending that this Court can exercise subject matter jurisdiction over the case under 28 U.S.C. § 1441 (federal question jurisdiction) and 28 U.S.C. § 1442 (federal officer jurisdiction). Civ. No. MJG-16-1591, ECF No. 1. AGC filed a Motion to Remand, which this court granted on March 17, 2017. In its First Remand Order, this Court found no federal jurisdiction based on a federal question, no jurisdiction based on federal officer standing, and that federal abstention principles favored a remand. Following the Order, trial was set in the Circuit Court for Anne Arundel County for September 5, 2017.

On Friday, September 1, 2017, Rheinstein filed a second Notice of Removal in this Court, contending that AGC’s recent interrogatory responses and deposition testimony gave rise to new and different grounds for removal. Notice of Removal ¶ 4, ECF No. 1. The state court proceeding was stayed on September 5, 2017, the next business day.

Analysis: The district court found that the removal petition was defective because the lawyer did not articulate a valid basis for federal subject matter jurisdiction. Simply because the lawyer may have committed some of the alleged violations in federal court cases did not confer federal subject matter jurisdiction on the district court. Further, there is a strong federal policy to avoid becoming involved in State disciplinary matters.  Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 431 (1982). See also  Telco Commc’ns, Inc. v. Carbaugh, 885 F.2d 1225, 1228 (4th Cir. 1989). The opinion, in my view, correctly remanded the disciplinary case to the Maryland courts.

Edward X. Clinton, Jr.

Source: Attorney Grievance Commission of Maryland v. RHEINSTEIN, Dist. Court, D. Maryland 2017 – Google Scholar

Court Denies Poorly Argued Sanctions Motion

The case was filed in the New Jersey state courts and was removed to federal court. The district court granted a motion to remand the case back to the New Jersey courts. Even after remand, the Defendants sought sanctions for the assertion of what they believed were frivolous claims. The Defendant did not identify any particular pleadings that were filed in federal court that were frivolous. Therefore, it denied the motion.

The explanation: “Defendant does not point to a particular federal filing that forms the basis of its claims for sanctions. Instead, it refers to Plaintiffs’ state court filings, see Def. Sanctions Br. at 7 (referring to Plaintiffs’ arguments opposing Defendant’s motion to dismiss in state court), as well as representations made during discovery, see 8 (referring to statements from Plaintiffs’ depositions). Defendant also highlights Plaintiffs'”refusal to withdraw these claims.” See id. at 8. However, the complained of conduct is not sufficient to demonstrate that Plaintiffs affirmatively advocated their positions in federal court. Since any doubt is resolved in favor of Plaintiffs, and since Defendant did not point to an affirmative pleading or other filing in federal court on which sanctions should be based, the Court will not impose sanctions on Plaintiffs. Therefore, Defendant’s motion for sanctions is denied.”

If you are seeking sanctions, be as precise as possible as to what conduct was sanctionable. Otherwise your motion may meet the same fate that this one did.

Source: MAKWANA v. MEDCO HEALTH SERVICES, INC., Dist. Court, D. New Jersey 2017 – Google Scholar

Sanctions Denied Where Party Conducted A Pre-Filing Investigation

This was a Fair Debt Collection Practices Act case in which the Plaintiff sued three defendants. Ultimately, the defendants all obtained summary judgment.

One defendant filed a motion for Rule 11 sanctions. She argued that she had sold her interest in the company defendant and was not a proper defendant. She claimed that once the plaintiff was informed of that fact, he had a duty to drop her from the case.

The district court did not agree. First, it concluded that the party, Tauriac, did not meet the requirements of the Rule 11 safe harbor in that she failed to give 21 days notice before seeking sanctions. Second, the District Court concluded that the plaintiff had done a sufficient pre-filing investigation to warrant the inclusion of Tauriac in the complaint. The plaintiff had obtained documentation that appeared to contradict Tauriac’s claims. The court denied the sanctions motion.

The opinion is thoughtful and thorough and discusses all the factors to determine if sanctions were appropriate.

Source: Seamans v. HOFFMAN, SWARTZ AND ASSOCIATES, INC., Dist. Court, ND Illinois 2017 – Google Scholar