Category: Sanctions For Frivolous Lawsuits

Evidence of Pre-Suit Investigation Defeats Sanctions Claim


Rule 11 sanctions motions are most often filed after a defendant wins the case on summary judgment. The Defendant will then argue that the plaintiff’s claims were objectively unreasonable or that the plaintiff failed to conduct a pre-suit investigation. In Dominguez v. Barracuda Tackle, LLC, No. 8:20-cv-1538 KKM-AEP, a patent infringement lawsuit, the court granted summary judgment to the Defendant but denied Rule 11 sanctions on the ground that plaintiff had conducted a pre-suit investigation. The court’s opinion contains a thoughtful, if pithy, explanation for the denial of sanctions.

Defendants’ objections raise two principal assertions regarding the motion for sanctions: (1) Plaintiffs’ counsel did not perform a pre-suit investigation and (2) Plaintiffs’ legal claims were clearly unreasonable. Upon a de novo review, the Court agrees with the well-reasoned explanation of the Magistrate Judge on those points. First, the Court finds that the declaration of Yunior Dominguez is evidence of a pre-suit investigation. While the declaration was not signed by Plaintiffs’ counsel, it still shows that Plaintiffs and counsel explored the validity of claims prior to suit. Second, the Court agrees with the Magistrate Judge that a reasonable juror could conclude that the two bait nets at issue perform substantially the same function with substantially the same result. While ultimately this is not enough to create a triable issue of fact in the light of the claims construction, it was “not so quixotic as to warrant sanctions.” Rodick v. City of Schenectady, 1 F.3d 1341, 1351 (2d Cir. 1993). Indeed, if all suits that did not create a triable issue of fact were sanctionable, one doubts if the legal profession would continue to be a profitable enterprise. Although the Defendants assert that Plaintiffs filed this suit for the improper purpose of extracting a nuisance-value settlement from Defendants, at bottom, they offer no evidence of this malintent apart from the losing disposition of the claims. The Court declines to impose sanctions on this basis.

Edward X. Clinton, Jr. www.clintonlaw.net

Federal Judge Sanctions Lin Wood, Sidney Powell and other lawyers


In King v. Whitmer, No. 20-13134, Judge Linda Parker issued a 110 page opinion sanctioned several lawyers who filed the complaint and the amended complaint under Rule 11, the Court’s inherent authority and 28 U.S.C. §1927. This opinion is very significant and it may cause changes in the way election law is practiced in the future. The Court found that the allegations in the Complaint lacked a good faith basis in law and fact and that the lawyers vexatiously multiplied the proceedings. The court used every possible ground to support the sanctions award and made credibility findings.

A link to the opinion is here: https://www.michigan.gov/documents/ag/172_opinion__order_King_733786_7.pdf

At the time these lawsuits were brought, they appeared to me to be reckless and risky. It is one thing to allege that a voter was disenfranchised. It is another thing all together to allege that the entire election was a fraud.

11th Circuit Affirms Dismissal of “Shotgun” Pleading


Barmapov v. Amuial, 986 F.3d 1321 (11th Circ. 2021) affirms the dismissal of a shotgun pleading. A shotgun pleading is a poorly organized pleading usually filed by a pro se litigant. Here, the shotgun pleading was filed by an attorney, not a pro se litigant. The court described the pleading in this way:

Barmapov filed his initial complaint in the district court in March 2018, and he filed an amended complaint five months later. The amended complaint was 116 pages and 624 numbered paragraphs long, and it included 20 causes of action, under both federal and state law, against 23 named defendants and 20 John Doe defendants. The district court dismissed it because it was “in an improper shotgun format.” Barmapov had “lumped together” many of his allegations against the 23 named defendants, rendering his complaint “unclear and confusing as to which [d]efendant [was] being charged with which conduct.” The district court also described the complaint as “devoid of specific allegations” such that it was not clear what each defendant “specifically did to be liable as to each stated count.” Finally, the court criticized the complaint for incorporating about 350 paragraphs into each of the 20 counts, even though the “paragraphs [were] not all properly directed at the [d]efendants subject to [each] count, nor [were] they pertinent to each claim.” The court granted Barmapov leave to file a second amended complaint.

In his second amended complaint, Barmapov reduced the number of named defendants 1324*1324 to 16 and the length of the complaint to 92 pages and 440 numbered paragraphs. He also removed all federal causes of action. The 19 counts against the defendants included allegations of fraud, breach of fiduciary duty, and civil conspiracy —all presumably under Florida law.

The district court concluded that Barmapov’s second amended complaint “still fail[ed] to provide a short and plain statement justifying relief and … allegations that [were] simple, concise, and direct.

The court was unimpressed with the second amended complaint and dismissed the case with prejudice. The 11th Circuit affirmed with a published opinion.

But the second amended complaint undoubtedly falls into the second category of shotgun pleadings. It is rife with immaterial factual allegations, including five pages and 24 paragraphs of irrelevant details about the alleged criminal backgrounds of some of the defendants. To make matters worse, the complaint then incorporates these paragraphs into 13 of the 19 counts, including counts against defendants who had no part in this background history. Other examples of inconsequential details include Barmapov’s business background; the relationships among Yossi, Guy, and Avrham Amuial, Terry Rafih, and John Obeid; Barmapov’s history with Reuben Sastiel; the experiences of Barmapov’s grandson working for the Amuials; and the contentious business meetings between Barmapov, the Amuials, and Sastiel. In addition, the second amended complaint indiscriminately incorporates and repeats 249 numbered paragraphs of factual allegations—spanning 50 pages—into nine of the 19 counts, without any effort to connect or separate which of those 249 factual allegations relate to a particular count. As a result, these nine counts include factual allegations that are immaterial to the underlying causes of action. See Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1359 n.9 (11th Cir. 1997) (describing a complaint in which four counts incorporated all 43 numbered paragraphs of factual allegations, many of which appeared to relate to only one or two counts, as “an all-too-typical shotgun pleading”); see also Weiland, 792 F.3d at 1322 n.12 (identifying Chudasama as an example of one of the second category of shotgun pleadings).

If these problems were not enough to make Barmapov’s second amended complaint a shotgun pleading, the complaint also includes numerous vague and conclusory allegations. It alleges that Yossi Amuial “sabotage[d]” Barmapov’s efforts to apply for financing, but it provides no explanation as to how this sabotage occurred. It also briefly states that four of the defendants “worked together to forge Barmapov’s signature” on important paperwork. Later, it states that six of the defendants “worked in concert to forge Barmapov’s signature” on documents related to a financing agreement and that one of these defendants then fraudulently notarized Barmapov’s signature. But the complaint never explains how these alleged forgeries relate to any of the 19 causes of action. Finally, at the end of his narrative account, Barmapov asserts that “Yossi, Guy, Avrham and Reuben … expelled him as a member” of the joint venture 1326*1326 because he refused to contribute more money. But he offers no explanation as to how he could have been expelled when, by his own account, there was only one other member of the joint venture.

Because Barmapov’s second amended complaint is “replete with conclusory, vague, and immaterial” allegations, a defendant who reads the complaint would be hard-pressed to understand “the grounds upon which each claim [against him] rests.” Weiland, 792 F.3d at 1322-23. Take, for example, the first four counts, which allege that the Amuials and Reuben Sastiel were Barmapov’s business partners and that they breached their fiduciary duties. The complaint neither quotes nor provides any specific details about the operating agreement for the purported joint venture between Barmapov and these defendants. And its brief explanations of this business arrangement are nonsensical. The complaint states that only one of these four defendants—Sastiel—signed the operating agreement, but it asserts without explanation that the other three still owed fiduciary duties under the agreement. It calls Yossi a “member,” a “manager,” and an “agent” of the joint venture. It refers to Guy as a “member,” a “de facto manager,” and an “agent and employee.” Finally, it states that Avrham is a “member,” an “agent,” and a “de facto principal,” in addition to being Barmapov’s personal “confidant and business advisor.” If Barmapov himself cannot offer a coherent explanation for how the joint venture was structured, we cannot expect the defendants to do it for him by digging through 50 pages and 249 numbered paragraphs of scattershot factual allegations.

Comment: Ultimately, the dismissal of this complaint is the responsibility of the client’s lawyers who allowed a disorganized pleading to be filed with the court.

Irrational Behavior Dooms ADA Lawsuit


In Holt v. Houston Methodist Sugar Land Hospital, No. H-19-5464 (S.D. Texas Houston Division), December 31, 2020, the court dismissed an Americans With Disabilities Act discrimination case because the pro se plaintiff had developed a pattern of refusing to comply with discovery and court orders.

The explanation:

“Plaintiff has repeatedly failed to comply with Orders issued by the Magistrate Judge, including orders to appear for conferences. When ordered on October 3, 2019, not to file additional documents until the Court ruled on Defendant’s 2019 Motion to Dismiss, Plaintiff filed four additional documents on October 9, 2019. Plaintiff failed to appear as ordered for conferences on May 8, 2020, and on July 27, 2020.

Plaintiff also refused to participate in discovery. She failed to respond to written discovery and failed to appear for her deposition on June 24, 2020. Her only explanation for her refusal to comply with her discovery obligations was that she believed the Court had ruled in her favor on the ADA claims and that depositions occur at the beginning of a case. Even after the Magistrate Judge ordered her to comply [Doc. # 125], Plaintiff again refused to respond to written discovery and failed without explanation to appear for her deposition on September 24, 2020.

Between the February 28, 2020, Memorandum and Order ruling on Defendant’s 2019 Motion to Dismiss and December 29, 2020, when Plaintiff filed her “Motion to Deny Defendant Motion to Dismiss,” Plaintiff intentionally refused to participate in the prosecution of this lawsuit. Plaintiff’s refusal persisted notwithstanding at least four orders [Docs. # 119, # 123, # 125, and # 128] for her to participate in discovery, respond to an issue raised by Defendant, or appear for a conference. Plaintiff’s refusal to comply with court orders and participate in discovery persisted notwithstanding at least two orders [Docs. # 125 and # 128] warning her that failure to participate in discovery could result in dismissal of this lawsuit.

In her “Motion to Deny Defendant Motion to Dismiss,” Plaintiff notes that in the Magistrate Judge’s Order [Doc. # 100] entered October 3, 2019, Plaintiff was precluded from calling or appearing at Defendant’s place of business, at defense counsel’s office, or at the Court unless there was a hearing scheduled. This in no way explains or excuses Plaintiff’s failure to comply with Court orders, including the Order [Doc. # 125] requiring Plaintiff to appear for her deposition, or to respond to Defendant’s written discovery requests. Moreover, Plaintiff’s explanation for refusing to appear for her June 24, 2020 deposition was not that she believed her appearance at counsel’s office was precluded by the Magistrate Judge’s October 3, 2019 Order. Instead, Plaintiff stated that she would not appear for her deposition because oral depositions occur at the beginning of a case and she would “not be starting this case over.”

Plaintiff also cites the statement in the October 3, 2019 Order that discovery deadlines were vacated and a new scheduling conference would be held after the Court ruled on the 2019 Motion to Dismiss. It is clear, however, that the referenced scheduling conference occurred on May 8, 2020, but Plaintiff chose not to attend.

Plaintiff relies also on the statement in the October 3, 2019 Order that neither party could file anything in the case until the Court ruled on the 2019 Motion to Dismiss. The Court ruled on the 2019 Motion to Dismiss in its Memorandum and Order [Doc. # 112] issued February 28, 2020. After that date, there was no prohibition on Plaintiff filing additional matters. Yet after that date, until December 29, 2020, Plaintiff willfully refused to file anything, to participate in discovery, or to appear at conferences held by the Magistrate Judge.

In this case, there is a clear record of Plaintiff intentionally and steadfastly refusing to participate in discovery, to appear for conferences with the Magistrate Judge, and to prosecute her lawsuit in any way for a 10-month period. This intentional delay was caused by Plaintiff’s own conduct. As a result, the Court finds without reservation that sanctions are warranted.

The Court finds that there is no lesser sanction that would induce Plaintiff to comply with Court orders and with her discovery obligations. Plaintiff is pro se and filed this lawsuit in February 2019 challenging the termination of her employment in 2017. There is nothing in the record to suggest that Plaintiff has funds to pay a monetary sanction. Court orders and repeated warnings that failure to comply could result in dismissal of this lawsuit have not persuaded Plaintiff to fulfill her discovery obligations.

Although the Court recognizes that dismissal is a severe sanction, Plaintiff’s conduct in this case has been intentional and persistent. The case was filed almost two years ago. Yet, because of Plaintiff’s refusal to prosecute her lawsuit and comply with Court orders and discovery obligations, basic discovery has not begun. Indeed, to date Plaintiff has not responded to Defendant’s written discovery requests or appeared for her deposition. Dismissal of this case, after repeated warnings, is warranted.”

Comment: courts will tolerate a great many faults by pro se litigants, but, eventually, everyone has to comply with the rules.

11th Circuit Holds That District Courts Have Jurisdiction Over Sanctions Motion Even If They Do not Have Subject Matter Jurisdiction


The title of this post is a bit complex. I apologize for that. But the topic is important. Sometimes, a party brings a case to federal court and the court later determines that it lacks subject matter jurisdiction. The case is then dismissed for lack of jurisdiction. What happens, however, when there is a sanctions motion pursuant to 28 U.S.C. §1927? Joining other circuits that have considered the issue, the 11th Circuit held that the district courts do indeed have jurisdiction to decide sanctions motions. This is important as it gives the court the power to discipline conduct and award sanctions even if there was no jurisdiction over the entire case. Obviously, I think the opinion is correct and well-reasoned.

The reasoning:

In the world of jurisdiction, there’s an important distinction between the underlying case or controversy and certain “collateral” matters. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). The former includes the merits of the dispute as well as many procedural questions. The latter includes a limited set of issues “collateral to the merits” of the case. Willy v. Coastal Corp., 503 U.S. 131, 137, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992). Think things like “the imposition of costs, attorney’s fees, and contempt sanctions.” Cooter & Gell, 496 U.S. at 396, 110 S.Ct. 2447.

Although we call these issues “collateral,” that doesn’t make them any less important. Many involve the power to enforce compliance with the rules and standards that keep the judiciary running smoothly. See Willy, 503 U.S. at 137, 139, 112 S.Ct. 1076. Without them, “abuses of the judicial system” would go unchecked, “burdening courts and individuals alike with needless expense and delay.” Cooter & Gell, 496 U.S. at 397-98, 110 S.Ct. 2447. And that’s not just a matter of procedure. Because justice delayed is justice denied, these powers ensure that justice is done.

The distinction between the underlying case and collateral issues is important when it comes to jurisdiction because it affects a court’s power to decide an issue. Once a court loses jurisdiction over a case, it may no longer decide issues arising out of that case. See, e.g., Capron v. Van Noorden, 6 U.S. (2 Cranch) 126, 127, 2 L.Ed. 229 (1804). But it can still decide certain “collateral” issues related to the case. See Cooter & Gell, 496 U.S. at 395, 110 S.Ct. 2447.

Here, all agree that the district court lacked subject-matter jurisdiction over the case. So the question for us is whether Irish’s motion for sanctions under the district court’s inherent powers or § 1927 was a part of the underlying case (which would mean that the court lacked the power to rule on the motion) or a “collateral” issue (which would mean that it had the power to do so).

Fortunately, we don’t approach this question on a blank slate. The Supreme Court has told us that sanctions under Federal Rule of Civil Procedure 11 are a “collateral” issue and thus a court may decide a Rule 11 sanctions motion even if it lacks jurisdiction over the underlying case. See Willy, 503 U.S. at 137-39, 112 S.Ct. 1076. The decision reasoned that exercising jurisdiction in this context was both constitutionally permissible and practically important.

On the first point, the Court explained that ruling on a Rule 11 motion “implicates no constitutional concern because it does not signify a district court’s assessment of the . . . legal merits” of the case. Id. at 138, 112 S.Ct. 1076 (cleaned up). Instead, it concerns “a collateral issue: whether the attorney has abused the judicial process.” Id. (cleaned up). And because a district court does not have to decide the merits to rule on a Rule 11 motion, it does not improperly consider the “`case or controversy’ over which it lacks jurisdiction.” Id.

On the second point, the Court reasoned that exercising jurisdiction over a Rule 11 motion is practically important because “[t]he interest in having rules of 1310*1310procedure obeyed” outlives the merits of a case. Id. at 139, 112 S.Ct. 1076. This makes sense. The need to deter those who might violate the rules does not rise or fall with any particular case. It is an ever-present need of all courts. Simply put, district courts need the power to rule on these issues to ensure “the maintenance of orderly procedure.” Id. at 137, 112 S.Ct. 1076.

Both these points apply equally to sanctions under a court’s inherent powers or § 1927. These sanctions, like Rule 11 sanctions, do not require a court to rule on the merits of the underlying case. Our analysis in the next Part makes this clear. And the purpose of the sanctions outlasts the end of the case. Otherwise, parties who abuse the judicial procedures could get off scot-free anytime it turned out that the district court lacked subject-matter jurisdiction.

For good reason, then, all of our sister circuits to have faced this question have recognized jurisdiction in this context. See, e.g., Ratliff v. Stewart, 508 F.3d 225, 231 n.7 (5th Cir. 2007)Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642, 645 (6th Cir. 2006)In re Jaritz Indus., 151 F.3d 93, 96-97 (3d Cir. 1998)see also Fidrych v. Marriott Int’l, Inc., 952 F.3d 124, 137-38 (4th Cir. 2020)Zerger & Mauer LLP v. City of Greenwood, 751 F.3d 928, 931 (8th Cir. 2014).

Today, we join them and hold that a district court may address a sanctions motion based on its inherent powers or § 1927 even if it lacks jurisdiction over the underlying case.

Hyde v. Irish, 962 F.3d 1306 (11th Cir. 2020).

Comment: the court affirmed the denial of the sanctions motion.

Major League Baseball Wins Sanctions Against Supplement Maker


In DNA Sports Performance Lab, Inc. v. Major League Baseball, No. C20-00546 (N.D. California October 27, 2020), the district court awarded Rule 11 sanctions against DNA Sports for filing what it described as a “baseless” complaint against Major League Baseball. DNA markets certain supplements which have been banned by Major League Baseball and its players’ union. The district court found that the complaint was baseless and awarded Rule 11 sanctions. This plaintiff in the case, in my opinion, has pursued this type of litigation against Major League Baseball and its union. long after it was clear that the litigation was without merit and without basis in fact.

This is the description of the prior history of lawsuit between DNA Sports and Major League Baseball

“As detailed in the league’s motion for sanctions, DNA Sports and its attorneys have pursued the league, well before the instant suit, for the past nine years (Dkt. No. 42 at 4-5). Our tale begins with an October 2012 shakedown letter. Following two league investigations into DNA Sports’ former business venture, DNA Sports sent the letter accusing the league of character defamation, alleged $30,000,000 in damages, and threatened to sue unless the league promptly paid $6,000,000. DNA Sports, though, conceded that its products contained a banned substance under the Joint Drug Prevention and Treatment Program (Dkt. 42-2, Exh. A at 3).

In 2013, the league launched another investigation into the illegal sale of performance-enhancing drugs to players. Investigators targeted “anti-aging” clinics in Florida, including DNA Sports (Dkt. No. 19 at 5; Compl. ¶¶ 19-20).

In February 2014, DNA Sports sued the league in Florida state court, challenging the league’s investigation as unfair and discriminatory. But plaintiff missed several case management conferences and failed to perfect service until October, resulting in a November 2014 dismissal for failure to prosecute. Nix and DNA Sports Performance Lab, Inc. v. Major League Baseball, etc., et al., No. 3D14-2967, 2015 WL 1930327 (Fla. 3d Dist. Ct. App. Apr. 27, 2015).

In July 2016, following the league’s rejection of another letter, this time demanding $40,000,000, DNA Sports sued the Office of the Commissioner of Baseball and several league employees in the Southern District of New York challenging the same league investigation, alleging tortious interference with prospective economic advantage (Dkt. 42-2, Exh. D). After a pre-motion conference to discuss the league’s intent to file motions for dismissal under Rule 12(b)(1) and for sanctions, DNA Sports voluntarily dismissed that action in November 2016. Nix and DNA Sports Performance Lab, Inc. v. Office of Comm’r of Baseball, No. 16-CV-5604 (S.D.N.Y. July 14, 2016).

In late November 2016, less than a month after the dismissal, DNA Sports sued the league, the commissioner, and several league employees in New York state court for hacking DNA Sports’ social media accounts, tortious interference with economic advantage, and defamation of Nix — all in the course of the league investigation. Defendants removed to federal district court based on the hacking claim. Rather than move to remand or amend its complaint to satisfy federal pleading standards, DNA Sports voluntarily dismissed its federal hacking claim and proceeded with the state suit. The New York state court then dismissed the complaint in June 2018 as res judicata under FRCP 41’s two-dismissal rule, barred by statute of limitations issues, and for failure to state a claim. In December 2018, the state court denied DNA Sports’ motion to reargue the dismissal as frivolous and imposed attorney’s fees against DNA Sports and its counsel — fees which remained outstanding as of briefing here. Nix and DNA Sports Performance Lab, Inc. v. Major League Baseball, et al., No. 159953/2016, 2018 WL 2739433 (N.Y. Sup. Ct. June 7, 2018).

In April 2018, while litigating the third action, Neiman Nix — acting pro se — sued Kobre & Kim LLP and three attorneys (the league’s counsel), several MLB coaches and general managers, and over a dozen MLB clubs in Florida state court, alleging RICO, trade secret, and computer abuse violations. In December 2018, Mr. Nix voluntarily dismissed claims against the majority of the baseball clubs as well as Kobre & Kim and its lawyers. The action currently remains pending, however, against two remaining clubs and league personnel. Nix v. Luhnow, et al., No. 2018CA003920 (15th Fla. Cir. Ct., Palm Beach Cnty.).

In January 2019, DNA Sports sued the Office of the Commissioner of Baseball, current and former MLB commissioners, and several MLB employees in Florida state court for unlawful hacking and computer abuse violations in the course of the 2013 MLB investigation. After DNA Sports amended its complaint in response to a motion to dismiss, the court dismissed the claims against the commissioners but allowed DNA Sports to proceed with the remaining claims. Though that case pertained to the leagues’ alleged hacking of DNA Sports’ social media accounts during the 2013 investigation, DNA Sports sought discovery on the league’s stance and communications regarding IGF-1. Neiman Nix and DNA Sports Performance Lab, Inc. v. Major League Baseball, et al., No. 2019CA002611 (11th Fla. Cir. Ct., Miami-Dade Cnty.).

In March 2018, DNA Sports also sued ESPN, the Associated Press, and USA Today in the Southern District of Florida in March 2018, alleging that each had defamed plaintiffs by publishing or republishing a statement from the league that DNA Sports’ July 2016 tortious interference lawsuit “admit[ed] Nix and his company used bioidentical insulin-like growth factor (IGF-1), which is derived from elk antlers and is on baseball’s list of banned substances.” Nix and DNA Sports Performance Lab, Inc. v. ESPN, Inc., et al., No. 1:18-CV-22208-UU, 2018 WL 8802885, at *1-2 (S.D. Fla. Aug. 30, 2018). Plaintiff called the statement defamatory because it did not differentiate between natural and synthetic IGF-1, giving readers the impression that DNA Sports had engaged in illegal or legal-but-banned drug sales. The Southern District of Florida, however, held that the statement at issue was substantially correct and the omission did not render the report untrue, thus it was not defamatory. The district court dismissed the complaint with prejudice in August 2018. The Eleventh Circuit affirmed, ruling that league regulations banned all forms of IGF-1 — whether synthetic or natural. Nix and DNA Sports Performance Lab, Inc. v. ESPN, Inc., et al., 772 Fed. Appx. 807, 814 (11th Cir. 2019).

The instant action descends from the March 2018 suit. After the Eleventh Circuit’s decision, DNA Sports began to investigate the presence of natural IGF-1 in animal-derived protein products. Specifically, DNA Sports “consulted with several experts” about whether whey-protein products endorsed by the league would contain natural IGF-1 (allegedly, they would) (Reich Decl., Dkt. No. 31-1 at ¶¶ 9-10). DNA Sports did not test these products for IGF-1 but instead relied on what it and its experts deemed “common sense” (id. at ¶ 11; Opp. Br., Dkt. No. 46 at ¶ 6).

In June 2019, DNA Sports’ current attorney, Lance Reich, contacted the league’s general counsel inquiring about “the unfair competition and conduct by [the league] in maligning [DNA Sports] in public for selling products containing natural IGF-1” while the league and the union endorsed and profited “from the sale of other nutritional products that contain[ed] natural IGF-1.” As DNA Sports admits, Reich demanded that the league “cease its sponsorship and partnerships with all companies and entities that sell natural protein products that contain natural IGF-1,” and “publicly announce that all nutritional supplement products that contain natural IGF-1 are banned performance-enhancing substances,” or face a new suit (Reich Decl., Dkt. 31-1 at ¶ 12 & Exh. A). The league refused.”

The reasoning:

This order finds DNA Sports’ complaint baseless. That, along with finding Reich failed to conduct an adequate investigation, supports Rule 11 sanctions. And, such baselessness in addition to bad faith supports inherent authority sanction of DNA Sports itself.

First, this order finds DNA Sports’ complaint baseless. A prior order found glaring holes in the allegations against the union (Dkt. No. 53). Exhausted of defamation and other tort claims, plaintiffs sought relief under inapplicable statutes. To allege Lanham Act violations, plaintiffs must show that defendants made a false statement of fact in a commercial advertisement about its own or another’s product, that the statement actually and materially deceived its audience, and that plaintiff has been or is likely to be injured as a result of the false statement in the form of diverted sales or loss of goodwill. Southland Sod Farms v. Stover Seed Co. Eyeglasses, 108 F.3d 1134, 1139 (9th Cir. 1997). False advertising claims brought under state law require showing that defendants participated in or had control over the untrue or misleading advertisements. In re First Alliance Mortg. Co., 471 F.3d 977, 995-96 (9th Cir. 2006). Yet, DNA Sports admit that their products contain naturally-occurring IGF-1. They concede that the league and the union have banned IGF-1 in its natural and synthetic forms under their Joint Drug Prevention and Treatment Program. And they acknowledge that NSF International, an independent product-testing organization, certifies products as “safe for sport” after testing for banned substances enumerated in the drug program (Compl. at ¶¶ 8, 18, 29). So, DNA Sports brought false advertising and unfair competition claims, contesting the “certified for sport” declaration on several products that allegedly contained IGF-1, without ensuring they sued the right defendants (i.e., that defendants made, caused, or induced the allegedly false statement), showing requisite harm (i.e., that plaintiffs suffered injuries like diverted sales or loss of goodwill), or requesting appropriate relief (i.e., courts cannot enjoin action that has already ceased on its own accord) (Dkt. No. 53). Such baselessness supports an inference of improper motive. See Townsend, 929 F.2d at 1365.

The league’s prior motion for sanctions would have been granted for similar reasons. The majority of DNA Sports’ complaint rehashed prior suits against the league and relied on conclusory statements to baselessly allege Lanham Act, false advertising, and unfair competition claims. The complaint recapitulated the misdeeds of the league’s investigations that inspired DNA Sports’ February 2015, July 2016, November 2016, and January 2019 suits which were all settled by prior rulings (Compl. at ¶¶ 15, 19-20). It then invoked the press release that was the subject of the March 2018 suit to maintain that though it is true DNA Sports’ supplements contain banned IGF-1, the league publicly maligned plaintiffs and “essentially bann[ed] [them] from ever working again in any” league-related capacity (Id. at ¶ 24). This after admitting that DNA Sports never sold its supplements to league players on account of a non-competition agreement (Id. at ¶ 18). Finally, DNA Sports alleges that league players and coaches consume products with IGF-1 and have never been disciplined and several league-endorsed products that compete with DNA Sports contain IGF-1. All this lending itself to false advertising and unfair competition.

Recall that these claims require, among others, both a false statement and harm, such as lost goodwill or diverted sales. See Southland, 108 F.3d at 1139First Alliance, 471 F.3d at 995-96. Yet DNA Sports’ complaint failed to show how the targeted products (the league-licensed Gatorade “Recover” whey protein bars, Cytosport Muscle Milk protein shakes, and Eyepromise nutritional supplements) compete with DNA Sports’ own products, which cost hundreds of dollars more and contain a banned substance. Further, plaintiffs failed to show how the use of the logo or the press release — the alleged commercial speech here — diverted sales from DNA Sports to these specific products and how this speech was false. Without these elements, their allegations against the league are baseless.

Second, given the obvious pitfalls in DNA Sports’ complaint, this order finds Attorney Reich failed to reasonably investigate these claims. To assess whether an attorney has conducted an adequate pre-filing investigation, courts must consider factual questions regarding the nature of the inquiry and must determine whether the legal issues raised were warranted. Cooter & Gell, 496 U.S. at 399. DNA Sports and Attorney Reich alleged that they “consulted with several experts” about whether whey-protein products endorsed by the league would contain natural IGF-1 (allegedly, they would) (Reich Decl. at ¶¶ 9-10). DNA Sports did not test these products for IGF-1 but instead relied on what it and its experts deemed “common sense” to determine that all these certified for sport products contained IGF-1 (id.at ¶ 11; Opp. Br. at ¶ 6). Beyond this, a cursory investigation into Lanham Act, false advertising, and unfair competition claims would have revealed the commercial speaker, material-deception, and injury elements which could have saved DNA Sports’ complaint or at least, saved the league and the union the trouble of motion practice. Attorney Reich failed in this regard.

Third, this order finds DNA Sports filed its complaint to harass the league and the union. DNA Sports’ history of litigation demonstrates both that this suit is brought in bad faith to vex and that dismissal alone will not dissuade DNA Sports from trying again. Though this is only the first suit against the union, it is the sixth suit arising out of the same original circumstances against the league. As detailed in the prior order, prior dismissals and sanctions have not tempered DNA Sports’ vendetta against the league. It has repeatedly dismissed its cases against the league and companies, either voluntarily or in response to court orders. Yet, true to its reliable pattern, after dismissal, DNA Sports has simply developed a different theory in a different court based on the same facts and continued its pursuit of the league. In 2018, after several these dismissals, a New York state court imposed monetary sanctions on DNA Sports and its previous counsel for frivolous and harassing conduct against the league. Nix and DNA Sports Performance Lab, Inc. v. Major League Baseball, et al., No. 159953/2016, 2018 WL 2739433 (N.Y. Sup. Ct. June 7, 2018). As DNA Sports’ litigation history demonstrates, however, these sanctions have not fazed DNA Sports. Rather, it has continued to sue the league, affiliated entities, and now the union, this despite outstanding monetary sanctions for troublesome lawyering. Considering this prior misconduct, dismissal alone will not deter DNA Sports from filing further baseless and harassing suits.

Indeed DNA Sports and Attorney Reich refuse to dismiss outstanding cases against the league, proving that DNA Sports does not intend to change its course of conduct. After the August 1 order, the league offered to withdraw its motion for sanctions “if Plaintiffs [would] dismiss with prejudice all outstanding litigation against the MLB defendants and agree to bring no further litigation against the MLB defendants” (Dkt. No. 60 at 14). Although plaintiffs dismissed the instant action with prejudice, DNA Sports still has outstanding litigation against some of the league’s clubs and commissioner. These remain intact despite the league’s offer to withdraw their sanctions motion entirely.

Given DNA Sports’ persistence, it may be that no amount of sanctions will deter it from continuing its crusade. The requested amount of fees, however, will at least compensate the union and the league for the harm done here. As this is the sixth case against the league (at least), a full award is appropriate. Though this is the first suit against the union, a full award is justified because it is part of an entrenched campaign of harassment.”

Comment: as a lawyer you have a duty to investigate allegations before you sign your name to a pleading. Please take the time to give every allegation a thorough review to determine if you have evidence to prove that it is true. If your first complaint alleging a novel theory flops, don’t keep refiling the litigation in other courts. That will only lead to discipline. If you are being pressured to make allegations you don’t believe are supported by solid evidence, walk away from the representation. You have a duty to the court system to make well-founded and factually based allegations.

Ed Clinton, Jr.

Lawyer Narrowly Escapes Section 1927 Sanctions in Slip and Fall Case


Saenz v. Kohl’s Department Stores, Inc., No. 20-1517 (6th Cir. 11/2/2020) was a rather routine appeal from a grant of summary judgment. The plaintiff was injured when she slipped and fell on water on the floor of a Kohl’s store. The district court granted summary judgment because Kohl’s had no notice of the alleged hazard. The Sixth Circuit affirmed the grant of summary judgment and denied Kohl’s motion for Section 1927 sanctions. The court was “concerned” by the conduct of the lawyer for the plaintiff but did not impose sanctions. The issue raised in the sanctions motion was whether or not the lawyer had misrepresented the record on appeal. The Sixth Circuit concluded that he had done so, but the error was not sufficiently egregious to warrant sanctions. The court also noted that once the error was pointed out to the lawyer he had a duty to withdraw that argument from the appeal and did not do so.

The merits now behind us, we deny the motion by Kohl’s to strike Saenz’s brief as moot. See, e.g., Greenlee v. Sandy’s Towing & Recovery, Inc., No. 17-3080, 2018 WL 3655961, at *3 (6th Cir. Feb. 21, 2018). One matter, however, remains. Kohl’s has moved for sanctions, arguing that this appeal is frivolous because “Saenz’s entire appeal is premised on an interrogatory answer” that “is not part of the District Court’s record.”

As an initial matter, because Kohl’s “offers no evidence” that Saenz herself “harbored an improper motive” in bringing this appeal, “such as the intent to harass or cause delay,” we decline to impose sanctions against her under Federal Rule of Appellate Procedure 38 or 28 U.S.C. § 1912. Williams v. Shelby Cnty. Sch. Sys., 815 F. App’x 842, 845 (6th Cir. 2020).

As to her counsel, Brian Kutinsky, we find his conduct concerning. That said, we decline in the exercise of our discretion to impose sanctions against him personally. An attorney who “multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. Sanctions are appropriate under § 1927 “when an attorney has engaged in some sort of conduct that, from an objective standpoint, `falls short of the obligations owed by a member of the bar to the court and which, as a result, causes additional expense to the opposing party.'” Holmes v. City of Massillon, 78 F.3d 1041, 1049 (6th Cir. 1996) (quoting In re Ruben, 825 F.2d 977, 984 (6th Cir. 1987)); see also Mys v. Mich. Dep’t of State Police, 736 F. App’x 116, 117-18 (6th Cir. 2018).

Having represented Saenz from the filing of her complaint through this appeal, Kutinsky was (or should have been) “intimately familiar with the facts and procedural history” of this case. Mys, 736 F. App’x at 118. Indeed, during Beleski’s deposition, counsel for Kohl’s explicitly pointed out the discrepancy in the two versions of Interrogatory 9 and informed him that only the new version had been signed by a Kohl’s representative. Kutinsky then read that signed version— the one with no reference to “wet floor” signs—into the record. Yet despite this exchange, he quoted the unsigned, draft version in Saenz’s brief to the district court. He then perpetuated that error on appeal.

Given that the unsigned draft was nowhere else to be found in the record, appellate counsel for Kohl’s (who did not represent Kohl’s in the trial court) initially charged Saenz with fabricating evidence. Her attorney, for his part, now says that he “mistakenly believed that he was quoting from the signed answers to interrogatories.” And having learned of the events that transpired outside the record, Kohl’s has withdrawn its charge of falsification. Still, Kohl’s stresses that even after it brought this mistake to counsel’s attention a second time on appeal, he doubled down, insisting that we should now expand the record and reverse based on an unsigned interrogatory that the district court had no authority to consider. See Baugham, 211 F. App’x at 441 n.5; Fed. R. Civ. P. 33(b)(5).

We have previously sanctioned attorneys “for misrepresentations that were not accompanied by any `overt signs of bad faith’ but nonetheless amounted to a `misleadingly selective[] reading of the record.'” Mys, 736 F. App’x at 118 (alteration in original) (quoting Kempter v. Mich. Bell Tel. Co., 534 F. App’x 487, 493 (6th Cir. 2013)). What Saenz’s attorney has done here is arguably worse. His argument is based almost entirely on “evidence” that was not part of the record at all.

It is likewise inexcusable that Kutinsky now blames Kohl’s for failing to correct his error in the district court. It was his duty to exercise reasonable diligence before making a representation of fact. See Model Rules of Pro. Conduct r. 1.3 (Am. Bar Ass’n 2019). And it was his duty not to press his argument on appeal any further “unless there [was] a basis in . . . fact for doing so.” Model Rules of Pro. Conduct r. 3.1. But when this mistake was brought to his attention again on appeal, he nevertheless asked us to ignore the invalidity of the unsigned interrogatory, while trying to blame Kohl’s for being too slow to point out his own blunder. Understandably, neither Kohl’s nor the district court addressed this mistake below. It was mentioned once in passing in the facts section of Saenz’s brief, and the argument section never referenced the supposed floor signs. Kohl’s had no reason then to say anything. The floor signs became Saenz’s central argument only on appeal.

Nonetheless, although these actions might have been “unprofessional and serious enough to meet the standard for imposing sanctions,” we choose to “exercise our discretion not to sanction” counsel. Williams, 815 F. App’x at 846. No doubt, it was careless to quote the unsigned Interrogatory 9 and then appeal based on that error. But we appreciate that these are trying times; a Michigan stay-at-home order due to COVID-19 was in effect at the time Saenz filed this appeal, which may have limited her attorney’s access to the record. In these circumstances, we choose to give him the benefit of the doubt.

Even so, once the error was pointed out on appeal, Kutinsky “should have diligently withdrawn” his argument, rather than doubling down. Ridder v. City of Springfield, 109 F.3d 288, 299 (6th Cir. 1997). Such obstinance makes the case for sanctions close. But in his motion to expand, counsel did advance a legal argument that we could consider the unsigned interrogatory, insisting that because he quoted it within his brief to the district court, it became part of the “record on appeal.” See Fed. R. App. P. 10(a). This is of course incorrect: for even accepting counsel’s premise, his argument conflates the “record on appeal” with evidence in that record which may be considered for summary judgment purposes. See Byrne v. CSX Transp., Inc., 541 F. App’x 672, 675-76 (6th Cir. 2013). Yet absent bad faith, we decline to impose sanctions against this trial attorney whose legal argument on appellate procedure—though flawed—might conceivably be characterized as that of a reasonably zealous advocate. Cf. Mys, 736 F. App’x at 117-18 (“Section 1927’s purpose is to `deter dilatory litigation practices and to punish aggressive tactics that far exceed zealous advocacy.'”) (quoting Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642, 646 (6th Cir. 2006)). In our view, sanctions should generally be reserved only for “truly egregious cases of misconduct.” Williams, 815 F. App’x at 846 (quoting Ridder, 109 F.3d at 299).

Rule 37 Applies in Bankruptcy Court


In Markus v. Rozhkov, 615 B.R. 679 (S.D. NY. 2020) the United States District Court (on an appeal from the bankruptcy court) upheld a sanction award against one of the attorneys in a contested bankruptcy matter. The court held that Rule 37 sanctions do indeed apply in Bankruptcy court.

The discussion as to whether Rule 37 applies in contested bankruptcy matters:

Worms argues that the Sanctions Order is invalid because it was predicated on Rule 37, which, under his interpretation, does not ever apply to Chapter 15 proceedings. The FR responds that Rule 37 sanctions are available in Chapter 15 proceedings. Although the contours of Worms’s argument are less than pellucid, the Court will attempt to map out his reasoning in some detail. Importantly, this section addresses the arguments about whether Rule 37 can apply in Chapter 15 cases as a general matter; it does not discuss, as later sections of this opinion will, whether sanctions under Rule 37 were 699*699 specifically appropriate in the context of this Chapter 15 proceeding.

Worms’s argument is essentially two-fold. First, he asserts that he cannot have been held liable under Rule 37 because Bankruptcy Rule 7037 states that Rule 37 “applies in adversary proceedings” and the Chapter 15 proceedings were not “adversary proceedings” at the time the Bankruptcy Court imposed Rule 37 liability. That logic holds, as far as it goes, but it does not go very far. Bankruptcy Rule 7037 does not state that the only time Rule 37 applies to bankruptcy is in adversary proceedings. And Bankruptcy Rule 9014 forecloses such a reading. Bankruptcy Rule 9014, titled “Contested Matters,” states under subsection (c) that, “[e]xcept as otherwise provided in this rule, and unless the court directs otherwise, [Bankruptcy Rule 7037] shall apply.” Accordingly, by the plain terms of Bankruptcy Rule 9014, Bankruptcy Rule 7037 (and thereby, Rule 37) does not only apply to adversary proceedings. Indeed, Worms acknowledges that Bankruptcy Rule 9014(c) makes Rule 37 applicable to some contested matters.

But, Worms argues, that universe of contested matters cannot include any contested matters arising in Chapter 15 proceedings because Bankruptcy Rule 9014(b) provides that a motion under Bankruptcy Rule 9014 “shall be served in the manner provided for service of a summons and complaint by Rule 7004,” and Chapter 15 notices are not served in that manner. It is undisputed that Chapter 15 proceedings are not initiated “in the manner provided for service of a summons and complaint by [Bankruptcy] Rule 7004.”[9] If Bankruptcy Rule 9014 made itself applicable only when Bankruptcy Rule 7004 service is required, then Worms might have a winning argument. But it does not.

Bankruptcy Rule 9014(a)-(b) provides: “In a contested matter not otherwise governed by these rules, relief shall be requested by motion … [and the] motion shall be served in the manner provided for service of a summons and complaint by Rule 7004.” See also 10 Collier on Bankruptcy P. 9014.02 (16th ed. 2019) (“As acknowledged (`not otherwise governed by these rules’) by the rule, however, there are instances in which a contested matter is initiated by some other means.”). Chapter 15 proceedings are “otherwise governed by these rules”—specifically, Chapter 15 proceedings are governed by Bankruptcy Rule 2002(q) (which provides a substitute for Rule 7004 service).

Therefore, Worms is incorrect that Bankruptcy Rule 9014 is applicable only where Bankruptcy Rule 7004 service is required. Bankruptcy Rule 9014 (and, accordingly, Bankruptcy Rule 7037) may apply to contested matters “otherwise governed by these rules.” In sum, Bankruptcy Rule 9014 makes Rule 37 (via Bankruptcy Rule 7037) applicable to contested matters in Chapter 15 proceedings.

Bankruptcy Rule 9020 is the final blow that topples Worms’s house of cards. Under that rule, “Bankruptcy Rule 9014 governs a motion for an order of contempt made by … a party in interest.” By operation of the transitive principle, Rule 37 therefore applies to Chapter 15 contested matters when a party in interest moves for an order of contempt. That is precisely the situation here.

As outlined above, Worms’s argument that Federal Rule of Civil Procedure 37 does not ever apply to Chapter 15 proceedings cannot survive the plain text of the interlocking Bankruptcy Rules. That could be the end of the analysis. It is worth 700*700 noting, however, that precedent and pragmatism are also against him.

On the former, courts frequently recognize that Chapter 15 proceedings can involve contested matters covered by Bankruptcy Rule 9014. See In re Worldwide Educ. Servs., Inc., 494 B.R. 494, 499 n.1 (Bankr. C.D. Cal. 2013) (“Since a petition for recognition is not defined as an adversary proceeding under Rule 7001, it … should be treated as [a] contested matte[r] under Rule 9014.”); In re Basis Yield Alpha Fund (Master), 381 B.R. 37, 43 n.14 (Bankr. S.D.N.Y. 2008) (applying Bankruptcy Rule 9014 to Chapter 15 proceeding); In re Japan Airlines Corp., 425 B.R. 732, 732 n.2 (Bankr. S.D.N.Y. 2010) (same); In re Toft, 453 B.R. 186, 199 (Bankr. S.D.N.Y. 2011) (same); In re Compania Mexicana de Aviacion, S.A. de C.V., 2010 WL 10063842, at *1 n.1 (Bankr. S.D.N.Y. Nov. 8, 2010) (same).

And on the latter, Worms’s position would lead to the absurd result that bankruptcy courts handling Chapter 15 contested matters would lack Rule 37 recourse to enforce their orders. Rule 37 is intended to address discovery misconduct. That can occur as easily in contested matters under Chapter 15 as anywhere else. It would be wholly illogical for the rulemakers to have deprived bankruptcy courts of the Rule 37 toolkit in Chapter 15 contested matters. As demonstrated above, a plain reading of the rules demonstrate that the rulemakers had no such illogical intent.

Rule 37 is available in contested matters arising within Chapter 15 cases.[

For other reasons, the court reversed the sanctions decision and remanded the case to the bankruptcy court. That discussion is too complicated for this blog.

The opinion is thoughtful and important. Every practitioner who is involved in a bankruptcy matter should be aware that Rule 37 does indeed apply.

What is “Reptile Theory?”


Before my last post was written I had never heard of “reptile theory.” I found an excellent opinion (sadly unpublished) from 2017 that explains the theory in greater detail.

Defendant Costco Wholesale Corporation seeks to stop plaintiff’s counsel from making various statements to the jury during the upcoming trial. Uncoiling Costco’s motion, it appears to ask that I order Aidini’s counsel not to: (1) make any venomous remarks that might incite the jurors’ “primal” instincts to protect their offspring (what Costco calls the “reptile theory” of advocacy),[1] (2) suggest that Costco is slinking from its responsibility by defending this case, and (3) comment on the witnesses’ credibility.

Aldini v. Costco Wholesale, Inc., 2:15-cv-505 (D. Nevada 2017)(Andrew Gordon, J.)

Once shed of its skin, Costco’s motion is little more than a request that I monitor Aidini’s counsel to ensure they stay within the strictures of the federal evidentiary and procedural rules. Of course, counsel must have an evidentiary or legal basis for any statements to the jury. And if some specific statements square with the evidence but also pose a risk of unfairly undermining the jury’s reason, I will balance those scales when the time comes.[2] But I will not issue a blanket pretrial ruling based on nothing more than Costco’s suspicion that there are snakes lurking in the grass.

As to Costco’s request that Aidini’s counsel be barred from suggesting that the company is slithering from its responsibilities by defending this case, I cannot say at this point that this would be improper argument. Of course, argument is reserved for closings, not to be made during opening statements. And Costco is free to point out in its closing that it is entitled to defend itself like any other party.

Costco next requests that I prohibit Aidini’s counsel from suggesting that Costco’s witnesses speak with forked tongues or otherwise questioning their credibility. Again, there is no basis to issue such a ban at this time. Aidini’s counsel agree they will make comments about credibility only if founded in the evidence—and they are allowed to do that.

Similarly, Costco’s arguments about the reptilian theory fail. Federal courts have hissed at motions based on this theory that seek a broad prospective order untethered to any specific statements the other side will make.[3] As Aidini points out, it may be permissible for him to argue that, under Nevada’s law of negligence, the jury should consider what a reasonable person in the community would do in Costco’s place.[4] But Aidini’s counsel is prohibited from making statements that would place the jury in Aidini’s skin, or would otherwise violate the Golden Rule or any other applicable restriction on counsel’s arguments.[5]

IT IS THEREFORE ORDERED that Costco’s motion in limine (ECF No. 48) is DENIED.

Comment: this opinion should be published. Protective Order Granted To Prevent “Reptile Theory” Questions

District Court Denies Rule 11 Sanctions Even Though Plaintiff Did Not Respond To Motion


David Bailey v. Interbay Funding, LLC, 3:17-cv-1457 (VAB) (D. Connecticut, June 19, 2020) should be considered the case of the fortunate plaintiff. Bailey sued the finance companies after they initiated foreclosure proceedings against him. Bailey claimed a number of violations and added claims for common law fraud and civil conspiracy. In January 2020, the Court granted a defense motion for summary judgment. Defendants sought sanctions under Rule 11 because they argued that the fraud claim was baseless. The Court essentially held that while the claims might well have been sanctionable, it would deny sanctions to bring the case to an end.

To grant a motion for sanctions, the Court must conclude that it is “patently clear that a [targeted party’s] claim has absolutely no chance of success,” K.M.B. Warehouse Distribs., Inc. v. Walker Mfg. Co., 61 F.3d 123, 131 (2d Cir. 1995) (citation and internal quotation marks omitted); or that the targeted party’s factual claims are “utterly lacking in support,” Storey, 347 F.3d at 388.[1]

Defendants argue that “there is not, and never was, any good faith basis to allege that Defendants engaged in fraud, and Plaintiff’s obstinate insistence on doing so has forced Defendants to spend a significant amount of money defending this vapid claim.” Mem. for Sanctions at 2. They argue that no factual or legal basis existed at the time the Fourth Amended Complaint was filed because (1) Mr. Bailey knew the fraud claim was barred by the statute of limitations, id. at 13-15 (“Plaintiff unequivocally admits that he learned about the alleged defects in the Property shortly after March 6, 2006, which he admits impacted its value,” and no later than October 5, 2010, requiring him to commence this action by October 5, 2013, even if the statute of limitations could be equitably tolled); (2) Mr. Bailey released Defendants from these claims in various stipulation agreements, id. at 16-17; and (3) Mr. Bailey “is incapable of presenting any evidence to support” his fraud claim, yet persists in making unsupported claims of fraud, id. at 17-19.

Further, Defendants argue that Mr. Cayo “did not conduct a reasonable and competent inquiry before signing and filing the Complaint,” id. at 20, as required by his obligation under Rule 11 “to conduct a reasonable investigation of both the relevant facts and the law,” id. at 2. In Defendants’ view, “[e]ven if [Mr.] Cayo could not have conducted a full investigation into Plaintiff’s factual assertions without discovery from Defendants, [ ] he certainly had all the necessary information by November 12, 2018, when Defendants produced the loan file,” yet he “chose to ignore this information . . . and to pursue the baseless fraud claim.” Id. at 20.

Neither Mr. Bailey nor Mr. Cayo has responded to Defendants’ motion for sanctions. Nonetheless, the Court will not impose sanctions.

As Defendants acknowledge, Mr. Bailey admitted that he did not have documents showing Defendants’ alleged fraudulent concealment, but rather believed that Bayview had such documents in its file. Mem. for Sanctions at 9. Defendants contend that “by November 12, 2018, when Defendants produced almost 900 pages of Plaintiff’s loan file, both [Mr. Bailey] and [Mr.] Cayo had all the information they needed to confirm that there was no good faith basis to assert a fraud claim.” Id. But this loan file was produced months after Plaintiff submitted his Fourth Amended Complaint and therefore does not establish that it was “patently clear” that there was no chance of success on Mr. Bailey’s fraud claim.

After Defendants produced the loan file, the parties engaged in further discovery regarding the validity of the documents produced. See, e.g., Minute Entry, ECF No. 96 (Apr. 5, 2019) (Judge Hall setting deadlines for second deposition of Mr. Bailey and completion of expert analysis of handwriting). Defendants then moved for summary judgment, which Mr. Bailey opposed. Mot. for Summ. J.; Pl.’s Obj.

“`[A] litigant’s obligations [under Rule 11] with respect to the contents of . . . papers are not measured solely as of the time they are filed with or submitted to the court, but include reaffirming to the court and advocating positions contained in those pleadings and motions after learning that they cease to have any merit.'” Galin v. Hamada, 753 F. App’x 3, 8 (2d Cir. 2018) (summary order) (noting, however, that “it would not be appropriate for a district court to impose sanctions simply because a party unsuccessfully opposed summary judgment”) (citing Fed. R. Civ. P. 11 Advisory Committee’s Note (1993)).

But “Rule 11 sanctions are a coercive mechanism, available to trial court judges, to enforce ethical standards upon attorneys appearing before them.” Pannonia Farms, Inc. v. USA Cable, 426 F.3d 650, 652 (2d Cir. 2005) (citing Estate of Warhol, 194 F.3d at 334 (internal alterations and quotation marks omitted)). “Although the imposition of sanctions is within the province of the district court, any such decision should be made with restraint and discretion.” Id.; see also Lawrence v. Richman Grp. of CT LLC, 620 F.3d 153, 158 (2d Cir. 2010) (“Rule 11 does not . . . authorize sanctions for merely frustrating conduct.”); E. Gluck Corp. v. Rothenhaus, 252 F.R.D. 175, 179 (S.D.N.Y. 2008) (“Courts maintain a high bar for establishing a Rule 11 violation given judicial concern for encouraging zealous advocacy.” (internal citations omitted)). Rule 11 therefore “limits the sanctions that may be imposed for a violation of Rule 11 `to what is sufficient to deter repetition of [the wrongful] conduct or comparable conduct by others similarly situated.'” Salovaara v. Eckert, 222 F.3d 19, 34 (2d Cir. 2000) (quoting Fed. R. Civ. P. 11(c)); see also Universitas Educ., LLC v. Nova Grp., Inc., 784 F.3d 99, 103 (2d Cir. 2015) (“`[T]he main purpose of Rule 11 is to deter improper behavior, not to compensate the victims of it or punish the offender.'” (quoting 5A Wright & Miller, Federal Practice and Procedure: Civil 3d § 1336.3 (3d ed. 2004))).

The Court has now granted summary judgment to Defendants based on Plaintiff’s inability to produce evidence supporting his claims. See Ruling on Summ. J. Thus, one of the outcomes Defendants sought through sanctions—dismissal of the case, Mem. for Sanctions at 2—has occurred. See On Time Aviation, Inc. v. Bombardier Capital Inc., 570 F. Supp. 2d 328, 332 (D. Conn. 2008) (“[A] firmly held conviction of the correctness of one’s position does not authorize collateral attack on an opponent’s legal arguments by resort to Rule 11.”), aff’d, 354 F. App’x 448 (2d Cir. 2009).

Since the Court granted summary judgment to Defendants, Mr. Cayo has withdrawn his appearance from the case, and Mr. Bailey has not filed—and having failed to comply with the Court’s deadline, cannot file—anything further in this case. The case therefore will be closed.

Accordingly, rather than prolong this matter any further, this Court chooses to exercise its discretion and end this case.

Comment: the court denied the sanctions motion out of a desire to end the litigation and, perhaps, because the attorney who had represented the plaintiff withdrew from the case.

Should you have a question about federal procedure, do not hesitate to call me.

Ed Clinton, Jr.