An Unusual Decision – Misstatements In A Rule 37 Sanctions Motion Not Subject to Sanctions

The case is Lee v. Horton, 2-17-cv-2766 (Western District of Tennessee December 4, 2018). What makes this opinion unusual and worth reading is that the court concluded that certain misstatements in a motion for sanctions were not themselves subject to sanctions. Lee was injured in an accident. She sued Horton, a truck driver, and Kroger. Lee filed a motion to sanctions under Rule 37 in which she alleged that Kroger had destroyed the electronic logs of the Kroger truck. Lee’s motion for Rule 37 sanctions was denied. Lee’s counsel apparently clarified the factual allegations in a court hearing and admitted that some of them were, in fact, inaccurate.

The defendants then filed their own Rule 11 motion alleging that Lee had made numerous false statements in the Motion for Rule 37 sanctions. That motion was denied by the Magistrate Judge. The Defendants then appealed to the District Judge who adopted the Magistrate’s findings. No sanctions were issued.

The District Court agreed that Rule 11 did not apply:

The Magistrate Judge found that Lee’s statements were made in a Rule 37(e) motion for spoliation sanctions and were therefore outside the scope of Rule 11. See Fed. R. Civ. Pro. 11(d). (Supplemental Report and Recommendation, ECF No. 104 at 1382-84.) Rule 11 “does not apply to . . . motions under Rules 26 through 37.” Fed. R. Civ. Pro. 11(d). Defendants have not objected to this finding, and the Court therefore reviews it for clear error. Fed. R. Civ. P. 72(b) advisory committee notes.

Defendants have argued that “Plaintiff’s original Motion for Sanctions is nothing more than a defamatory narrative seeking a summary judgment as to compensatory and punitive damages.” (ECF No. 49-1 at 573.) The Court does not agree. Lee’s Motion explicitly seeks relief for alleged spoliation. (P.’s Mot. Sanctions, ECF No. 34 at 282 (“Lee prays for the following: (a) Sanctions against Kroger and Horton, jointly and severally, for intentional destruction of material evidence.”).) While Lee also asked for “summary judgment” as a sanction, (P.’s Mot. Sanctions, ECF No. 34 at 282) Rule 37(e)(2)(c) establishes default judgment as a possible penalty for intentional spoliation. The Court concurs with the Magistrate Judge’s finding that Lee’s statements were contained in a motion for sanctions brought pursuant to Rule 37(e), rather than Rule 56. The Court finds that Lee’s Motion for Sanctions is therefore outside the scope of Rule 11. Fed. R. Civ. Pro. 11(d).

In their Reply in support of their Motion, Defendants have also argued that “the crux of Defendants’ Motion for Sanctions is targeting Plaintiff’s counsel’s misrepresentations and conduct unrelated to any underlying discovery dispute.” (ECF No. 49-1 at 573-74.) The Court notes that Defendants’ original Motion for Sanctions, by its plain text, does seek sanctions for conduct related to an underlying discovery dispute. “Plaintiff’s Motion for Sanctions makes numerous factual contentions that have zero evidentiary support.” (Id. at 495.) “Plaintiff’s Motion for Sanctions makes numerous legal contentions in direct contrast to the authority provided.” (Id. at 497.) “Plaintiff’s Motion for Sanctions is presented to harass, cause unnecessary delay, and to needlessly increase the cost of litigation.” (Id. at 498.) Almost all of the specific statements cited by Defendants as inaccuracies were made in the Motion for Sanctions. (See generally Id., see also P.’s Mot Sanctions ECF No. 34.) The Court concurs with the Magistrate Judge that Defendants’ Motion for Sanctions is outside the scope of Rule 11(b). (Supplemental Report and Recommendation, ECF No. 104 at 1384.)

Even if the Rule 11(d) exception for discovery-related “motions” does not include the factual and legal contentions contained within those motions, the Magistrate Judge concluded that Lee’s representations during an August 21, 2018 hearing clarified any previous inaccuracies. (Supp. Report and Recommendation, ECF No. 104 at 1384-85.) Defendants have not objected to the Magistrate Judge’s conclusion regarding the hearing. The Magistrate Judge determined that additional deterrence was unnecessary when viewing Lee’s conduct as a whole. (Supp. Report and Recommendation, ECF No. 104 at 1384-85.) The Court has broad powers to impose sanctions, so long as they are “limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated.” Fed. R. Civ. Pro. 11(c)(4). The Court finds that it was not clearly erroneous for the Magistrate Judge to conclude based on subsequent clarifications that Lee’s conduct does not warrant sanctions.

28 U.S.C. 1927 did not apply either.

The Magistrate Judge previously found that Lee’s allegation that Defendants falsified trip sheets lacked evidentiary support. (ECF No. 61 at 694; Def.’s Obj. Report and Recommendation, ECF No. 93 at 1070.) Defendants specifically object that advancing a contention for which there is no evidence should be sanctionable under 28 U.S.C. § 1927. (Def.’s Obj. Report and Recommendation, ECF No. 93 at 1070.) The Court notes that Lee’s allegation of falsification does not appear in her Motion for Sanctions or her Reply. (See ECF Nos. 34, 37.) Neither the Magistrate Judge nor Defendants provide a specific citation for where this allegation was made in any filing. (See ECF No. 61 at 694; Def.’s Obj. Report and Recommendation, ECF No. 93 at 1070.) The record instead suggests that this argument was made in oral argument before the Magistrate Judge on August 21, 2018. (See ECF No. 46.) To be clear, a lawyer should not make statements in Court that lack evidentiary support. On a review of the record, however, the Court considers this argument to be a last-ditch effort that was dismissed out of hand rather than a multiplication of proceedings. While certainly indicative of a lack of care or knowledge, the Court does not find that this rises to a sanctionable level under 28 U.S.C. § 1927, given its limited impact.

The Court next considers whether the legal arguments contained within Lee’s Motion for Sanctions are sanctionable under 28 U.S.C. § 1927. Having reviewed the cases and federal regulations at issue, the Court finds that, while Lee’s arguments were incorrect, such misreadings are attributable to incompetence or negligence. The Court also notes that Defendants’ claim that such misrepresentations are “continuous” appears to be incorrect. Defendants only cite one motion in support of this argument, (Defs.’ Mot. Sanctions, ECF No. 40 at 497-98) and do not object to the Magistrate Judge’s finding that Lee’s counsel made significant clarifications at a subsequent hearing. (Supplemental Report and Recommendation, ECF No. 104 at 1385.) Court concurs with the Magistrate Judge that Lee’s legal arguments were wrong, but not frivolous. (See generally id. (finding under Rule 11 that “Lee’s counsel’s misinterpretation of . . . various legal arguments, while ultimately rejected by the court, do not amount to conduct that would be sanctionable.”) Given that the Defendants have not objected to the Magistrate Judge’s finding that the legal arguments in question were not sanctionable under Rule 11, and the fact that Lee’s counsel clarified Lee’s position at a subsequent motion hearing, the Court finds that these legal arguments are also not sanctionable under 28 U.S.C. §1927.

Conclusion: Lee’s lawyer was lucky here because he made misstatements on the record in an effort to obtain Rule 37 sanctions. Those statements were not accurate and, in my opinion, Lee’s lawyer was fortunate to escape some form of sanctions for this behavior. Apparently, his decision to admit he was wrong at oral argument before the Magistrate Judge saved him from sanctions.

Ed Clinton, Jr.

The Clinton Law Firm

Procedural Default Defeats Sanctions Motion

If you wish to move for Rule 11 sanctions, you must take the time to (a) give the other party 21 days to withdraw the offending paper or pleading; and (b) file the motion for sanctions as a separate motion. Failure to do that risks defeat.

This is the case King v. Wang S.D. New York 2018. King argued that Wang had presented frivolous legal theories in an amended pleading. The court never reached those arguments because King did not comply with the procedural requirements of Rule 11. The explanation for the ruling:

This Court declines to discuss the merits of the Kings’ arguments for sanctions because it finds that the Kings have failed to comply with Rule 11’s strict procedural requirements. Specifically, they failed to make their motion “separately from any other motion.” Fed. R. Civ. P. 11(c). Rather, they tacked their motion for sanctions onto their motion to strike the Amended TPC. See Bower, 2015 WL 10437758, at *3 (denying a motion for sanctions where the defendants’ “purported Rule 11 motion consist[ed] of a single, conclusory sentenced” added to the end of a brief); see also Williamson, 542 F.3d at 51 (affirming district court’s decision to deny request for sanctions pursuant to Rule 11 because the defendants failed to “make a separate motion for sanctions”).

The Kings also failed to comply with Rule 11(c)’s safe harbor provision. The parties do not dispute that the Second Circuit held in Lawrence v. Richman Grp. of CT LLC, 620 F.3d 153, 158 (2d Cir. 2010), that “the filing of an amended pleading resets the clock for compliance with the safe harbor requirements of Rule 11(c)(2) before a party aggrieved by the new filing can present a sanctions motion based on that pleading to the district court.” The parties dispute, however, whether Lawrence applies when a party has unilaterally amended its pleading, as opposed to when a party was granted leave to replead and then filed a new complaint, as was the case in Lawrence.

This Court finds that the rule in Lawrence applies to “all pleadings” and, therefore, applies even when a party has exercised its right to amend its pleading as a matter of course.[1] Lawrence, 620 F.3d at 157. Other courts in this district have applied Lawrence to pleadings amended as a matter of course under Federal Rule of Civil Procedure 15(a). See e.g., Rates Tech. Inc. v. Broadvox Holding Co., LLC, No. 13 CIV. 0152 SAS, 2014 WL 46538, at *5 (S.D.N.Y. Jan. 6, 2014) (holding that defendants were required to serve a new sanctions motion after plaintiffs, who had amended their complaint as a matter of course, filed a new complaint). This Court, like the district court in Lawrence, may be faced with “relentless motion practice”; however, as cautioned by the Second Circuit, that does not give this Court — or the Kings — the ability to “negate the safe harbor requirements of Rule 11(c)(2).” Lawrence, 620 F.3d 160.

Because the Kings have failed to meet the procedural requirements of Rule 11(c)(2) Court is barred from granting “any award of sanctions” and this motion is denied. Targum v. Citrin Cooperman & Co., LLP, No. 12 CIV. 6909 SAS, 2013 WL 6087400, at *9 (S.D.N.Y. Nov. 19, 2013).

Another Sad Adventure in Diversity Jurisdiction Leads To An Award of Attorney Fees

This is an unpublished case Zausa v. Zausa v. Pellin, 18-1896 (7th Circuit 2018). The case is noteworthy because the plaintiff’s counsel believed he could cure a diversity jurisdiction problem by filing the same case in another state. When that failed, he tried again before a second district judge. The second district judge awarded sanctions to the defendant for having to deal with the same meritless jurisdictional arguments twice.

Diversity jurisdiction requires that plaintiff and defendant be citizens of different states. Here, they were both citizens of Illinois. There could never be diversity of citizenship because the parties were from the same state. It would not matter if the case was filed in Illinois or Alaska – there was no diversity of citizenship.

Here, the lawyer made things worse by refiling a dismissed lawsuit before another federal judge. The first attempt to file the lawsuit was dismissed because there was no diversity of citizenship. The plaintiff’s lawyer then made a second such attempt by refiling the same case in another district.  The court set forth the procedural history of the case as follows:

Terri Zausa obtained a multi-million-dollar judgment against Jack in Illinois state court before this became a federal case. Jack has not been able to pay. Jack’s former business partner, Michael Pellin, allegedly owes him roughly $1.8 million for Jack’s share of their business, which Pellin purchased in 1990. In recent years, Pellin has not met the schedule of payments he owes Jack. Although Jack and Pellin executed a release from the purchase agreement in 2004, Terri says that there was no consideration given for the release, which was solely “for tax purpose[s].” And Pellin purportedly continued to make payments to Jack until 2010. Terri now attempts to collect directly from Pellin to satisfy Jack’s debt to her.

Terri’s first crack at collecting from Pellin began when attorney Salem represented her in filing an enforcement action in the Northern District of Illinois. Judge St. Eve dismissed Terri’s claims against Pellin with prejudice for lack of standing because Terri was not a party to Jack and Pellin’s agreements. Since Terri, the original creditor, and Jack, the original debtor, were not completely diverse, Judge St. Eve dismissed the case without prejudice for lack of subject-matter jurisdiction.

[Plaintiff’s attorney Maurice J.] Salem then brought another lawsuit against Jack on Terri’s behalf, this time in the Northern District of Indiana. The complaint also named Pellin as “Third-Party Respondent.” Contrary to Judge St. Eve’s conclusion, Salem stated that federal jurisdiction existed “by reason of complete diversity of citizenship” because Terri and Jack Zausa are Illinois residents and Pellin is an Indiana resident.

Pellin moved to dismiss the complaint for lack of subject-matter jurisdiction. He pointed to the previous litigation in front of Judge St. Eve and her explanation that complete diversity did not exist because, although Terri was attempting to discover Indiana-citizen Pellin’s assets, her ex-husband (an Illinois citizen) was the judgment debtor.

The jurisdictional theory Salem presented to Judge Moody was:

[I]n Indiana, there is complete diversity jurisdiction because neither Defendant Jack Zausa, nor Plaintiff Terri Zausa are domiciled in Indiana. In other words, Pellin, the only citizen of Indiana is the party of interest that does not share the state of Indiana with any other party. Compared to Illinois where Defendant Jack Zausa, another party of interest, shares the state with Plaintiff. However, the issue is not whether there is complete diversity jurisdiction in Illinois, because we are not in Illinois, the issue is whether there is complete diversity jurisdiction in Indiana.

(Emphasis in original). Unpersuaded, Judge Moody granted Pellin’s motion to dismiss, citing Terri’s (Salem’s) attempt to establish federal jurisdiction “with a skewed logic that is nearly impossible to follow.” He also noted that Terri, as plaintiff, could not sue Pellin as a “Third-Party Respondent.” Because Judge St. Eve had already explained the substantial defects in Terri’s lawsuit, and Salem then maintained the absurd approach to jurisdiction, Judge Moody ordered Salem to show cause why he should not be sanctioned under Federal Rule of Civil Procedure 11(b)(1) or (2). He also cautioned the plaintiff to refrain from asserting any more baseless jurisdictional theories.

In response to the show-cause order, Salem reiterated his incorrect understanding of diversity jurisdiction. He argued “as long as the parties with interest are not in the same state, then complete diversity jurisdiction exists.” Judge Moody concluded that there was no credible explanation for Salem’s conduct and granted all parties leave to move for attorney’s fees. Salem moved for reconsideration and asserted yet again that diversity jurisdiction existed. This time he attempted to explain in greater detail that moving the case to federal court in Indiana had solved the jurisdictional problem.

After the motion for reconsideration was denied, Pellin petitioned for reimbursement of the attorney fees that he had incurred. Salem opposed the motion by maintaining—for the fourth time—that diversity jurisdiction existed. He also asked Judge Moody to defer the issue of sanctions to the Northern District of Illinois, where he had filed a third lawsuit against Pellin that apparently was moving forward.

Judge Moody rejected Salem’s arguments, and in bold-face type declared one final time: “[C]omplete diversity means that no plaintiff may be from the same state as any defendant.” The judge ordered Salem to pay all of Pellin’s attorney’s fees. Judge Moody reasoned that sanctions were proper under either Rule 11(b)(1) or (2). He found that Salem filed the complaint with either “an unreasonable lack of legal basis” or “an intent to harass” Pellin and increase his litigation costs. Judge Moody also declined to defer the issue of sanctions to the Northern District of Illinois because that court would have no jurisdiction to rule on sanctionable conduct occurring in this case. Salem filed a motion for reconsideration, insisting Terri was not really suing “defendant” Jack, so it did not matter that the two of them were domiciled in the same state. Judge Moody denied the motion because it presented nothing new, and he renounced any further efforts “on this frivolous matter.”

Salem now appeals the district court’s order awarding attorney fees against him and the order denying his second motion for reconsideration.

Essentially, the court faulted Salem for not understanding the basics of diversity jurisdiction. The Court of Appeals for the Seventh Circuit affirmed the sanctions award against Salem because he raised the same frivolous arguments time and again before two separate federal judges.

The explanation:

Salem’s contentions are better viewed as restatements of his consistently confused theory of diversity jurisdiction, rather than “new” arguments. And, waiver aside, Salem’s arguments are frivolous and sanctionable, just as Judge Moody concluded. No matter how Salem phrases it, his core assertion is that federal subject-matter jurisdiction over a given case exists or does not depending on the state in which the federal court sits. He habitually misunderstands the tenets of diversity jurisdiction and confuses jurisdiction with venue.[3] He was so told, by both Judge St. Eve and Judge Moody, yet in this appeal he persisted with this faulty assertion.

This persistence in asserting frivolous arguments warrants sanctions against an attorney. A district court may sanction a lawyer who submits frivolous legal arguments not warranted “by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” FED. R. CIV. P. 11(b)(2); see Berwick Grain Co., Inc. v. Ill. Dep’t of Agric., 217 F.3d 502, 504 (7th Cir. 2000). A “frivolous” argument is one that is baseless or made without a reasonable inquiry into the facts and law. Berwick Grain Co., Inc., 217 F.3d at 504. A district judge may also sanction a lawyer or party who presents a pleading to the court “for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” FED. R. CIV. P. 11(b)(1). Consistently asserting a theory—as attorney Salem did here—directly contrary to federal statute (28 U.S.C. § 1332) as interpreted by all federal case law is frivolous.

The Seventh Circuit affirmed the sanctions award. The lesson here is an old one – you have to know the law. In federal court it is especially important to understand the procedural and jurisdictional rules.

Sanctions Awarded For Frivolous Counterclaim

This is an appeal from a decision sanctioning a lawyer and his client for filing a frivolous counterclaim in a foreclosure case. After the lender sued, the defendant, Gates, brought a counterclaim for rescission.  A rescission claim argues that the entire transaction should be canceled and the parties put back in their original places. Because the time limit for the rescission action had run, there was no basis for a rescission claim.  The claim was frivolous. The Ninth Circuit affirmed the sanctions award.

The district court did not abuse its discretion by awarding attorney’s fees in the amount of $17,474.50, jointly and severally, as a sanction against Gates and his attorney. See Christian v. Mattel, Inc., 286 F.3d 1118, 1126-28 (9th Cir. 2002)(setting forth standard of review and describing grounds for Rule 11 sanctions); see also Riverhead Sav. Bank v. Nat’l Mortg. Equity Corp., 893 F.2d 1109, 1113 (9th Cir. 1990) (concluding that jurisdiction to hear an appeal exists where a sanctions award was imposed jointly and severally on the defendants and their non-party counsel). Contrary to Gates’s contention, there are no nonfrivolous arguments to support his theory that the Supreme Court’s decision in Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015), revived his time-barred claim for rescission. See Fed. R. Civ. P. 11(b) & advisory committee’s note to 1993 amendment (arguments for modification or reversal of existing law do not violate Rule 11(b)(2) if they are nonfrivolous under an objective standard).

In his opening brief, Gates fails to challenge the district court’s determination under Rule 11 that he brought his counterclaim for an improper purpose, and he has therefore waived any such challenge. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“[O]n appeal, arguments not raised by a party in its opening brief are deemed waived.”); Greenwood v. FAA, 28 F.3d 971, 977 (9th Cir. 1994) (“We will not manufacture arguments for an appellant. . . .”).

The case is LPP Mortgage Ltd. v. David W. Gates, 17-55355 (unpublished).

Joel Brodsky Sanctioned By District Court

The case is Twyman v. S&M Auto Brokers, 16 C 4162. The case is a standard odometer rollback case. The district court sanctioned Joel Brodsky in the amount of $50,000 for his conduct in the case.

This is an odometer rollback case that landed in federal court due to a little known federal statute that federalized the crime of manipulating a car’s odometer in order to protect purchasers from potential shady practices committed by used car sellers. This small Federal Odometer Act case began in April of 2016 and burgeoned into an 18-month battle between defense counsel, Joel Brodsky, and Plaintiff’s counsel over the purchase of a $35,000 used SUV from S&M Auto Brokers (“S&M”). The Plaintiff, Donald Twyman alleged that S&M failed to inform him that the Infiniti SUV had been in a serious accident, had been rebuilt, and the odometer had been rolled back. After the car drove poorly, Twyman brought it to a local Infiniti dealer who reviewed the warranty claim history that showed a discrepancy in the odometer readings and that the car had been in an accident. Twyman filed suit alleging a violation of the FOA and that S&M committed fraud and violated the Illinois Consumer Fraud and Deceptive Business Practices Act when it failed to disclose that the SUV had been damaged in an accident.

Throughout the course of the litigation, the Court has observed first-hand Brodsky’s unprofessional, contemptuous, and antagonistic behavior directed at opposing counsel. These have included false accusations and inappropriate diatribes in pleadings, where he repeatedly accused opposing counsel of lying, extortion, attempting to create a false record, and repeatedly requested sanctions without any good-faith basis. (See, e.g., Dkt. Nos. 67, 106, 138, 151, 155.) Brodsky also sent numerous vitriolic emails to opposing counsel during the course of the litigation, including asking opposing counsel “How do you even call yourself a lawyer? You are an embarrassment to the profession,” and accusing him of being an extortionist and manufacturing the case. (See, e.g., Dkt. 166-1). This pattern of behavior continued at a deposition of one of Defendants’ experts. There, Brodsky was confrontational and antagonistic and made numerous speaking objections, improperly instructed the witness not to answer, in addition to cursing several times on the record (Dkt. 160 at 58:19, 73:21), making several inappropriate ad hominem attacks against opposing counsel, including calling him a liar (id. at 71:21-22), and accusing counsel of engaging in a criminal enterprise (id. at 122:6-19).

Ironically, in many of his diatribes, Brodsky has accused opposing counsel of over-litigating what he often referred to as a “small-claims” case, yet Brodsky filed a number of baseless or unnecessary motions himself prolonging the litigation and the costs of litigation. These include a motion opposing plaintiff’s ministerial motion to correct a typo in his expert’s report (Dkt. 62); a motion in limine seeking the Court initial review of whether Defendant’s expert reports were sufficient (Dkt. 96); a frivolous motion to strike Plaintiff’s Rule 56 statement; and a baseless motion to seal a recording of the deposition referenced above in order for it not to be accessed on the public record. (Dkt. 162).

Of special concern for the Court, however, are allegations Brodsky leveled at Donald Szczesniak, Plaintiff’s expert witness. In his reply in support of his motion in limine regarding expert witnesses (Dkt. 102), Brodsky leveled charges against Szczesniak for allegedly fabricating an expert report in an unrelated matter involving Diane Weinberger. Two and a half weeks later, Brodsky filed another motion regarding Szczesniak, this time asserting that Szczesniak had damaged Weinberger’s fence. (Dkt. 108.) That motion also raised a number of alleged unrelated civil judgments against Szczesniak, relating to his auto repair business. (Id. at 3.) The motion also accused Szczesniak of sending Brodsky an anonymous facsimile transmission of a newspaper article in an “attempt to intimidate the Defendants [sic] attorney from further searching into his background.” (Id.) This motion sought an order of “indirect criminal contempt” against Szczesniak and sought to have the Court make an immediate referral to the United States Attorney for a criminal investigation to be launched against Szczesniak. (Id. at 4.) The Court summarily rejected Brodsky’s motion and reminded him that there were proper ways to challenge an expert, none of which were followed, and that if he believed that criminal activity occurred, he himself could call the USA and make a complaint. (Dkt. 110.) Nonplussed by the Court’s refusal to act as his bully, Brodsky filed a motion seeking sanctions against Szczesniak and against Plaintiff for retaining him. (Dkt. 121.) Brodsky’s motion for sanctions again accused Szczesniak of attempting to intimidate Weinberger by threatening her and purportedly damaging her fence. Rather than file a motion seeking to bar the expert testimony pursuant to the Court’s gatekeeping function in Daubert, Brodsky instead simply sought an order barring Szczesniak from testifying due to his alleged improper and even illegal behavior. (Id. at 4.)

Plaintiff responded to Brodsky’s motion for sanctions, asserting that Brodsky’s accusations were false and attached affidavits from Szczesniak, his wife, and son Luke who all attested that Szczesniak was home sick at the alleged time Weinberger’s fence was damaged. Plaintiff’s response also pointed out inconsistencies in the story Weinberger told the police as compared to the affidavit she completed for Brodsky, including Szczesniak’s alleged location on the night of the incident and the timing of the incident. (Dkt. 137 at 3.) In fact, there is no evidence that Szczesniak was ever questioned by police in the matter, let alone arrested. Plaintiff also denied Brodsky’s allegation that Szczesniak anonymously faxed him an article, pointing out that Brodsky’s affidavit was not grounded in facts, and submitted sworn testimony that Szczesniak was taking his elderly mother to the doctor at the time the fax was sent. (Id. at 5.)

In the face of evidence contradicting his motion for sanctions, Brodsky again doubled-down. In his reply, he called Szczesniak a liar and accused Szczesniak of submitting a false declaration and committing perjury. (Dkt. 138 at 2.) To use his own words against him, “in what can only be described as strange and bizarre” Brodsky asserts that “an examination of the LexisNexis public records search that was done on Donald Szczesniak, states that while he does have a wife named Jennifer, a mother named Ruth Ann, and a son named Zachery, there is no son named Luke.” (Id.) Brodsky went on to insinuate Szczesniak had fabricated the affidavit filed by Luke and that he indeed had fabricated Luke. Brodsky then went on to accuse Plaintiff’s counsel of bringing the lawsuit “to extort money, based entirely on false evidence, and an expert who is [sic] tampers with witnesses and presents false declarations and/or engages in false lawsuit . . . is no small matter.” Meanwhile, Szczesniak, a proposed witness in the matter, sought representation based on the allegations against him that went to the heart of his work — testifying as an expert in odometer fixing cases. Szczesniak appeared in Court with his retained personal attorney and sought leave to file a response to the accusations against him. Rather than back down, Brodsky opposed his efforts to file a response and increased his level of accusations against the witness, this time alleging that the instant case was “not the first case in which Szczesniak has fabricated persons and events in affidavits filed with the Court, nor is it the first time he has been accused of witness intimidation. It appears to be a habit.” (Dkt. 142 at 1.) The Court permitted Szczesniak to file a response to defend his reputation and Brodsky filed another reply, again accusing Szczesniak of damaging Weinberger’s property and fabricating his expert report, along with other allegations of impropriety regarding unrelated cases. (Dkt. 150.)

Following this flurry of serious allegations, the Court held a status on April 6, 2017. At that status hearing, the Court again reminded the parties that it was considering sanctions based on the conduct of counsel and noted that the filings were the most acerbic and nasty accusatory filings the Court had ever seen. Despite these warnings, Brodsky continued to impugn Szczesniak and claim that the case was fabricated in open court. The Court ordered counsel to bring their clients to the next status, which was held six days later. At that status, the Court informed the parties of the need for a sanctions hearing regarding Brodsky’s accusations and asked the parties whether they were aware of the protracted proceedings and why they were taking so long to deal with such a minor dispute. Brodsky’s client informed the Court that he was unaware of the ethical issues and had never been conveyed an offer to settle the suit — something he was willing to do long ago. (Dkt. 165.) Following the April 12, hearing Plaintiff filed a motion for sanctions. After retaining counsel, Brodsky filed a motion to withdraw his filings involving accusations against Szczesniak. (Dkt. 172.) He also withdrew from representing S&M. Shortly before the hearing, Brodsky filed a short response and the sanctions hearing was held on July 7, 2017. In his response, he denied that any of the filings were submitted for an improper purpose and highlighted his efforts to “address issues raised by the Court.” (Dkt. 208.)

At the hearing, which lasted several hours, the Court heard testimony from Peter Lubin, lead counsel for Twyman, and also testimony from Szczesniak. Lubin testified regarding his good-faith basis for filing the lawsuit, discussed Szczesniak’s integrity and qualifications, denied being in a criminal enterprise (a rant that Brodsky repeated throughout his filings), and discussed the emotional distress he suffered from Brodsky’s poor treatment. Szczesniak testified about the importance of his reputation to his work as an expert witness, denied damaging Weinberger’s fence, denied sending Brodsky an anonymous fax, and confirmed that he has a son named Luke. Szczesniak also averred that Brodsky’s filings had damaged his employment and put undue stress on his family. Brodsky declined to testify but gave a statement where he said he let his frustrations get the better of him and that he “went too far in this case.” Brodsky also apologized to the Court “for anything that [he] did that caused this Court concern or stress” and apologized to Lubin for “going too far in this case” and also to Szczesniak. Brodsky did not submit any evidence contradicting Lubin’s or Szczesniak’s testimony nor did he provide any explanation for his behavior throughout the case, including the allegations against Lubin and Szczesniak. Although not reflected on the transcript, throughout the hearing, Brodsky was occupied with his cellular phone and made several audible exasperated sighs during the course of the hearing as the testimony was being presented.

Outside of the events leading up to the sanctions hearing, the Court warned Brodsky several times that his behavior could result in sanctions. (See, e.g., Dkt. 118; Dkt. 165 (informing the parties that the Court has reviewed the docket and the need for a sanctions hearing because “Mr. Brodsky has been overly aggressive in this case, that he’s not following the rules of professional conduct, and he is filing a lot of motions to exacerbate the discovery process. And so it’s going to be a [sanctions hearing] primarily to determine whether sanctions should be applied to him” and noting the seriousness of the accusations Brodsky made against Szczesniak but noting that the Court has “no problem levying the appropriate sanction against a lawyer who misrepresents or lies to the Court in such a manner as to hijack a litigation”); Dkt. 216 at 9-10 (warning the parties that settlement of the matter, including attorneys’ fees would not moot the Court’s desire to consider sanctioning counsel, because the “Court always has jurisdiction over protecting the integrity of the proceedings before her” and that the Court intended to “protect the integrity of this courtroom”).)

Due to the repeated violations of this Court’s orders to refrain from the aggressive, unprofessional and vitriolic behavior, the Court grants the motion for sanctions [194] and imposes the following sanctions: 1) Brodsky shall pay a fine of $50,000 to the Clerk of the Court; 2) Brodsky shall attend an ethics course approved by the Attorney Registration and Disciplinary Commission and provide the Court with verification of completion of the course; 3) Brodsky shall attend an anger management course and provide the court with verification of the successful completion of the course; and 4) the Court shall refer Brodsky to the Executive Committee for consideration of being barred or suspended from practicing in the Northern District of Illinois for his failure to abide by Court rules.


Plaintiff’s Flooding Lawsuit Goes Down the Drain Because Of Discovery Violations

The case is captioned Justice v. Cabot Oil and Gas, 17-cv-2986 S.D. West Virginia. One of the plaintiffs, James Grimes alleged that Cabot Oil caused flooding on his property by failing to “reasonably divert water from its natural course.” According to Grimes, this caused damage to his property.

After Grimes failed to participate in discovery, Cabot Oil moved to dismiss as a sanction under Rule 37. The court granted the motion. The explanation:

Cabot summarizes in the motion the relevant and undisputed facts that led to the pending motion’s filing. (ECF No. 60 at 1-2.) In short, since Grimes filed his Complaint on April 13, 2017, he has failed to respond to Cabot’s written discovery requests, failed to submit to a deposition, failed to respond to Cabot’s motion to compel, failed to comply with Magistrate Judge Tinsley’s discovery order, and has otherwise failed to participate in this litigation at all. (See id.) It is apparent that Rule 37 sanctions are appropriate in this situation.

First, Grimes has acted in bad faith by blatantly disregarding this litigation since he filed the Complaint well over fifteen months ago. Grimes never responded to initial discovery requests, and his counsel similarly refused to respond to multiple correspondence from Cabot’s counsel inquiring as to the whereabouts of his responses. (See id.) While the failure to participate in initial discovery could be rectified through later involvement, bad faith became even more apparent here through Grimes’ noncompliance with a very specific discovery order entered by Magistrate Judge Tinsley. Cabot suggests that Grimes “moved away . . . since at least January 25, 2018,” (id. at 4), but the discovery order was entered on December 18, 2017, (ECF No. 17). That order was electronically transmitted to Grimes’ counsel upon entry, so Grimes clearly had notice of the court order with which he still has not complied. Simply put, Grimes’ actions—or lack thereof—since the litigation’s commencement serve as a distinct example of bad faith.

Second, the Court agrees with Cabot that it has suffered prejudice because of Grimes’ misconduct. As Cabot notes, Grimes has “deprived Cabot of any knowledge regarding [his] claims,” (ECF No. 60 at 4), and with summary judgment motions due on August 2, 2018, Cabot has been unable to develop any evidence to rebut those claims. Grimes supposedly no longer owns the property that he claims was flooded. (Id.) Thus, Cabot’s experts have been unable to examine the alleged damage suffered. (Id. (“Likewise, counsel for Mr. Grimes did not take Cabot’s experts to the location where the mobile home was previously located and, accordingly, Cabot’s experts do not even know the location of the alleged flooding.”).) The ability to inspect the property and develop expert opinions related to the cause of the supposed damage is essential to Cabot’s defense. In short, the inability to defend itself due to Grimes’ noncompliance with Magistrate Judge Tinsley’s order indicates that Cabot has already suffered great prejudice.

Third, “stalling and ignoring the direct orders of the court with impunity . . . must obviously be deterred.” Mut. Fed. Savs. & Loan Ass’n, 872 F.2d at 93. This applies not only to future litigants who will appear before this Court but also to those who are involved in the instant action. Cabot filed a motion to compel against all Plaintiffs in this matter after almost two months passed from the date when Cabot served its initial discovery requests. (See ECF Nos. 12, 13, 14.) It took Magistrate Judge Tinsley’s order for the other Plaintiffs in this case to respond to those requests. (See ECF No. 20.) While the Court is unaware of additional misconduct by those Plaintiffs, they should be aware of the consequences that may arise from noncompliance with this Court’s orders.

Lastly, no less drastic sanctions than dismissal will be effective in this situation. Cabot has been left with no information regarding Grimes’ claims, and the dispositive motions deadline is looming. Grimes has shown no interest in participating in this action or even communicating with his attorney even though his counsel has not moved to withdraw representation. There is no indication before the Court that Grimes has any intention of obeying Magistrate Judge Tinsley’s order in the future or further pursuing his claims against Cabot. Accordingly, Grimes forfeited his right to prosecute this case, and dismissal of his claims appears to be the only appropriate sanction under Rule 37.

Comment: the plaintiff must participate in the litigation. If the plaintiff does not comply with discovery, plaintiff essentially forfeits the lawsuit.

Ed Clinton, Jr.


Plaintiff files Amended Complaint to remove some claims – Sanctions Motion Is Denied

via Bernard v. ILLINOIS CENTRAL RAILROAD COMPANY, Dist. Court, WD Tennessee 2018 – Google Scholar

This is a wrongful termination case where the plaintiff initially filed time-barred EEOC claims. The claims were time-barred because they were not filed within 90 days of the issuance of the right to sue letter.

After the Defendant moved to dismiss those claims, the plaintiff promptly filed an amended complaint removing those claims. Therefore, Rule 11 and Section 1927 sanctions were denied:

The filings reveal that Illinois Central and Bernard conferred numerous times regarding the issues surrounding Bernard’s initial complaint. There is no indication that Bernard’s conduct was objectively unreasonable such that sanctions would be appropriate under either Rule 11 or 28 U.S.C. § 1927. Based on the parties’ discussions and Bernard’s January 3, 2018, supplementation of his Complaint with the Right to Sue letter, Illinois Central should have been aware that Bernard was not intending to pursue any claims except those arising from the 2015 EEOC Charge. It further appears that counsel were conferring during and around the holidays and various days of inclement weather which impacted business. And, it appears during this time that there was some dispute as to which attorney would be appearing on behalf of Bernard. While counsel for Bernard could have been more prompt in amending his pleadings or more clear in responding to Illinois Central’s concerns, the court declines to find that such conduct was objectively unreasonable given the circumstances.