Dispute over $750 spawns Section 1927 Motion


Stelzer v. Endeavor Business Media, Inc., No. 18-cv-979 (W.D. Wisconsin 8/31/2020) was a copyright case filed for the wrongful use of a photograph. Stelzer, a professional photographer, took a picture and filed for copyright protection. Endeavor allegedly used that photograph without attribution and Stelzer sued. Endeavor offered to pay $750 and Stelzer accepted. Stelzer’s counsel then had a change of heart and tried to raise her demand and back out of the settlement. The district court enforced the settlement agreement and then denied to award section 1927 sanctions against plaintiff’s counsel. The explanation:

Endeavor asks the court to impose sanctions against Liebowitz under 28 U.S.C. § 1927. That section authorizes the court to sanction any attorney who unreasonably and vexatiously multiplies the proceedings in a case. Endeavor contends that Liebowitz’s attempt to back out of the settlement warrants a § 1927 sanction, and it asks the court to shift the cost of enforcing the settlement to Liebowitz.

Liebowitz is a notorious copyright litigator who has been sanctioned many times. The Southern District of Illinois recently sanctioned him for backing out of a settlement agreement, precisely the conduct at issue in this case. Ward v. Consequence Holdings, Inc., No. 3:18-CV-1734-NJR, 2020 WL 2219070 (S.D. Ill. May 7, 2020). Endeavor submitted the court’s opinion in that case as a purported notice of supplemental authority, Dkt. 21, which Liebowitz asks the court to strike, Dkt. 22. The court will deny the motion to strike; whether Liebowitz has been sanctioned for similar misconduct is a fair consideration. Liebowitz was also sanctioned by Southern District of New York, which required Liebowitz to provide notice of that sanction to every court in which he had a pending case. Dkt. 24. That court’s sanction order includes a list of 40 additional sanction orders against Liebowitz. And in this case, Magistrate Judge Crocker found that plaintiff—really Liebowitz—had not complied with plaintiff’s discovery obligations, so Judge Crocker shifted fees and warned against future non-compliance. Dkt. 11.

Nevertheless, the court declines to impose sanctions. Both sides bear responsibility for the unprofessional conduct of this case. Endeavor failed to inform the court that plaintiff had actually provided discovery responses before the hearing on the motion to compel, resulting in the withdrawal of the order on that motion. Dkt. 13. And Liebowitz’s attempt to back out of the settlement agreement was prompted, in part, by Endeavor’s three-month lack of diligence in responding to Liebowitz’s revisions to the settlement agreement. Endeavor hectored Liebowitz about his one-month delay; Endeavor’s three-month delay in responding to a few modest changes is inexcusable. Judge Crocker put it aptly: “The most charitable interpretation of what’s going on in this lawsuit is that neither side is doing its job.” Dkt. 13. There is blame enough for both sides; it’s fair that they bear their own expenses.

One last word of warning to Liebowitz. Liebowitz is admitted to practice in this court, and he has other cases pending. This court’s Local Rule 1.E. provides for automatic reciprocal discipline:

E. Reciprocal Discipline

1. When another jurisdiction enters an order of discipline against an attorney admitted to practice in this court, the same discipline is automatically effective in this court without further action by the court.

2. The attorney may apply to the chief judge for modification or vacation of the discipline in this court.

The judge in the Southern District of New York has referred Liebowitz for potential discipline. Accordingly, the court will order Liebowitz to inform the court within 10 days if his practice privileges are restricted, suspended, or revoked by any other jurisdiction.

Comment: Once the case was settled, it was bad manners, but not a violation of Section 1927, to renege and seek more money.

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