New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

Commercial Litigation and Arbitration

New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
Commercial Litigation and Arbitration
« Back to Complex Lit Blog

Inherent Power — Professional Plaintiff Cannot Show Good Faith by Claiming Reliance on Advice of Counsel, Particularly when Reasserting Claims Repeatedly Rejected by Other Courts

Download PDF

From Stalley v. Mountain States Health Alliance, 2010 U.S. Dist. LEXIS 8643 (E.D. Tenn. Feb. 2, 2010):

Plaintiff — along with his partner in litigation, Erin Brockovich — filed numerous lawsuits in federal courts across the country, claiming the Medicare Secondary Payer Act ("MSP"), 42 U.S.C. § 1395y(b), was a qui tam statute entitling him to sue, as a private attorney general, healthcare entities for failing to reimburse Medicare for expenses incurred. Without exception, the district courts rebuffed this novel legal claim and held Plaintiff lacked standing to assert it. [Citations omitted.] Undeterred, Plaintiff pursued his claims against five defendants in this Court, which consolidated the actions and dismissed Plaintiff's suit because he lacked Article III standing on which to assert his claims and failed to state a claim upon which relief could be granted. ***

The United States Court of Appeals for the Sixth Circuit affirmed this Court's decision of judgment, holding the MSP could not possibly be construed as a qui tam statute. Stalley v. Methodist Healthcare, 517 F.3d 911, 916 (6th Cir. 2008). Further, the Sixth Circuit determined sanctions against Plaintiff and his counsel were appropriate in light of Plaintiff's "utterly frivolous" claims, which he had unsuccessfully advanced in other jurisdictions.... The Sixth Circuit determined Plaintiff and his attorneys pursued the claims "for an improper purpose" and the court could impose sanctions, after holding an evidentiary hearing and giving the parties an opportunity to be heard, under the court's inherent power....

After this Court had dismissed Plaintiff's suits, Defendants filed motions for sanctions.***

The Sixth Circuit held Plaintiff and his law firm's actions constituted bad faith in this case. Stalley, 517 F.3d at 920. As stated by the Sixth Circuit:

Without question, Stalley and his attorneys know that he has no standing to raise the claims he asserts against [Defendants]. Stalley cited no legal authority for his contention MSP is a qui tam statute, and he has failed to persuade a single one of the many other courts in which he has raised this claim. He cannot claim that he is arguing for a good-faith extension of the law because Congress must explicitly create qui tam statutes. . . . Therefore, we can come to only one conclusion: Stalley and his attorneys have continued to pursue these claims against [Defendants] for an improper purpose.

***The Court previously determined the Sixth Circuit's findings regarded the entirety of the litigation and was not limited to the appeal***. Plaintiff and his law firm litigated in bad faith by filing frivolous lawsuits, which had no legal or factual basis. Plaintiff's contention he relied on his counsel is undermined by his actions and the finding by the Sixth Circuit he was acting as a "'self-appointed bounty hunter' whose goal, apparently, is to profit at the expense of [Defendants]." Stalley, 517 F.3d at 919 (internal citation omitted). As [Magistrate] Judge Inman concluded [in an R&R], Plaintiff is a "professional plaintiff' and should be jointly and severally liable for any sanctions imposed. The record and the Sixth Circuit's opinion demonstrate both Plaintiff and his law firm knew the claims they advanced were meritless and were filed for an improper purpose.

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

Inherent Power Sanctions — Dismissal for Threatening Defendant and Magistrate Judge — No First Amendment Right to Threaten Violence

RICO: Domestic Injury — Delivery of Fraudulently Non-Conforming Goods FOB Los Angeles for Shipment to China Means Injury Arose Domestically When Purchaser Took Title —Other Relevant Factors Include That The Non-Conforming Goods Were Sourced and Made in the U.S. and The Racketeering Activity (Mail/Wire Fraud) Occurred in, and Was Directed from, the United States — Irrelevant to Domestic Injury Inquiry Whether Property Is Tangible or Intangible — 7th Circuit’s “Injury-Felt” Test of Domestic Injury Rejected by Supreme Court — RICO Standing Requires Concrete Financial Loss, Not Merely Injury to Valuable Intangible Property Interest (9th Circuit)

RICO Causation: Parents of Children with Disabilities Deprived In-Person Education and Services during the Pandemic Were Not Causally Injured by Teachers’ False Assurances to Federal Authorities That IDEA-Complaint Policies Were in Place, Which Caused Funds to Issue But Not to the Benefit of the Disabled Children — Damages Too Indirect — Proper Plaintiff Is U.S. Government — Private Injunctive Relief Under RICO Uncertain in Third Circuit

Sanctions: Rule 37(b)(2) Dismissal — Sixth Circuit Factors

Inherent Power Sanctions — Extrajudicial Misconduct: Sanctions Power Extends to Conduct Intended to Sabotage Court’s Ability to Adjudicate the Case Before It, Here, By Commencing State Court Actions Seeking to Enjoin the Federal Plaintiffs from Proceeding with Their Federal Litigation — Sanctions Fee Awards: The Factors Used For Calculating A Fee Award To A Prevailing Party Do Not Govern — Under Goodyear, the Relevant Inquiry Is Whether There Is A Sufficient Causal Link Between The Sanctioned Misconduct And The Fees Awarded

RICO: Members of Association-in-Fact Enterprise Must Act with a Common Purpose—Mere Allegation That Various Defendants Agreed at Different Times to Engage in Various Fraudulent Schemes Does Not Plausibly Support the Essential Inference, That They Acted with s Sufficiently Common Purpose

RICO Causation: (1) State’s Misrepresentation to Federal Government That It Was Providing Plaintiffs with Mandated Special Education Did Not Cause Plaintiffs’ Injury Because The Failure to Provide The Education Was Not Caused by the Fraud on the Federal Government — (2) The Three Factors for Assessing RICO Causation — (3) Limits of the Second Circuit’s Decision in Alix v. McKinsey That Causation Can Be Established Where A Fraud On The Judiciary “Or Other Governmental Entity” Resulted In A Resource Going To Someone Less Deserving

Rule 41(b): Five Factors to Be Weighed in Deciding Whether Dismissal Is Appropriate (Second Circuit) — Is A Finding of Bad Faith or Fault Required if Dismissal Is Without Prejudice? — Undecided If Truly Without Prejudice But It Is Required If the Without Prejudice Dismissal Will Act as a Dismissal on the Merits (Here, Because of the Statute of Limitations) — Failure To Consider A Lesser Sanction Than Dismissal Is Generally An Abuse Of Discretion

Spoliation Sanctions/Mootness: Stipulation Resolving “All Pending Discovery Disputes,” Which Are Enumerated, Does Not Moot Subsequent Sanctions Motion for ESI Spoliation — Postjudgment Sanctions Order Is Appealable When District Court Has Finally Disposed of Both Liability and Amount

Rule 37 Default Judgment Sanction: (1) Default Judgment Appropriate Only As a Last Resort, When Less Drastic Sanctions Would Not Ensure Compliance with the Court’s Orders — (2) Default Judgment Sanction Requires Willful or Bad Faith Failure to Obey Discovery Order — (3) Fugitive Defendant’s Failure to Appear at Court-Ordered, Remote Deposition Despite Court Warning That Sanctions Could Follow Disobedience Warrants Default Judgment — (4) District Court Afforded Wide Discretion in Interpreting Its Own Orders — (5) Filing a Notice of Appeal from a Non-Appealable Order (Here, a Discovery Order) Does Not Deprive the District Court of Jurisdiction over the Case

Archives
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

New York Office

© 2024 Joseph Hage Aaronson LLC  
Disclaimer | Attorney Advertising Notice | Legal Notice