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

Filing 9 Separate Suits on Behalf of 9 Tenants Against Landlord Sanctionable under Rule 11(b)(1) and Inherent Power, But Not § 1927 — Motion to Disqualify Based on Opposing Counsel’s Alleged Breach of Duty to His Own Client Violates § 1927

Download PDF

From DeDios v. International Realty & RC Investments, 2011 U.S. App. LEXIS 7421 (9th Cir. Apr. 11, 2011):

The district court did not abuse its discretion in sanctioning De Dios's counsel $500 for "vexatious litigation strategy" in filing nine separate but identical actions [on behalf of nine separate tenants in an apartment building against the managing agent] for alleged violations of the [Fair Debt Collection Practices] Act instead of a single action naming all nine tenants as plaintiffs. In its order to show cause on sanctions, the district court wrote:

[T]here appears to be no legitimate reason for the filing of nine individual actions rather than a single action naming nine Plaintiffs. By filing the case as they did, Plaintiffs' counsel unnecessarily multiplied the costs of litigation and the burden on the Court.

We agree. To begin, counsel failed to file a notice of related case in violation of the local rules. As referenced in the court's detailed findings, counsel attempted to justify her actions by professing that conflicts in the clients' respective settlement positions prevented her from filing one suit. This argument is singularly unpersuasive. The district court pointedly noted that "merely filing separate lawsuits does not alleviate the ethical issues related to collective representation." The district court also documented its concern that some of the clients undertook the litigation to punish International Realty rather than to resolve claims under the Act.

Although De Dios is correct that sanctions under 28 U.S.C. § 1927 do not apply to complaints or initial pleadings, see Moore v. Keegan Mgmt. Co. (In re Keegan Mgmt. Co., Sec. Litig.), 78 F.3d 431, 435 (9th Cir. 1996), the district court had ample grounds on this record to impose the sanctions under Rule 11 and its inherent authority to curb abusive litigation practices. See Fed. R. Civ. P. 11(b)(1) (allowing sanctions for filings that "harass, cause unnecessary delay, or needlessly increase the cost of litigation"); Gomez v. Vernon, 255 F.3d 1118, 1133-34 (9th Cir. 2001) (imposing inherent power sanctions for counsel's abusive tactics that resulted in unnecessary litigation).

The district court's additional sanctions award under 28 U.S.C. § 1927 — $12,000 in attorneys' fees to counsel for International Realty — arose from De Dios's motion to disqualify defense counsel because of an alleged conflict of interest in representing his client. According to De Dios, the conflict purportedly arose in earlier litigation because defense counsel, then representing Norton, the property owner, suggested that either International Realty or the receiver, not Norton, was the proper party defendant. The district court quickly dispatched this claim, finding that by virtue of a conflict waiver and an indemnity agreement there was no actual conflict. The district court further found that the motion was procedurally defective — De Dios filed it without complying with local meet and confer rules, see C.D. Cal. Local Rule 7-3 — and finally that De Dios lacked standing to seek disqualification for defense counsel's alleged breach of duties to his client, see Kasza v. Browner, 133 F.3d 1159, 1171 (9th Cir. 1998). It is not surprising that De Dios's counsel does not challenge the court's rulings, as its findings are well grounded and legally correct. Instead, De Dios pleads that the motion was not so vexatious as to warrant sanctions and that she was unaware of the indemnification agreement. Given that there was no legal basis for the motion, these after-the-fact justifications do not save the day. The district court did not abuse its discretion in awarding sanctions under 28 U.S.C. § 1927.

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

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

RICO and Injunctions: (1) State Court Actions Designed to Perpetuate and Monetize a RICO Violation Are Enjoinable under RICO, Even Though They Are Not Themselves Alleged to Be Predicate Acts [Note: Noerr Pennington Applies in RICO Actions] — (2) Although Civil RICO’s Text and Legislative History Fail to Reveal Any Intent to Override the Provisions of the Federal Arbitration Act, Arbitrations Are Enjoinable Under the “Effective Vindication” Doctrine Where They Operate As a Prospective Waiver of a Party’s Right to Pursue Statutory RICO Remedies — (3) Arbitration Findings May Be Given Collateral Estoppel Effect in a Civil RICO Action — (4) Injunction of Non-Corrupt State Court Litigations That Furthers a RICO Violation Are Enjoinable Under the Anti-Injunction Act’s “Expressly Authorized” Exception — (5) “The Irreparable Harm Requirement Is The Single Most Important Prerequisite For The Issuance Of A Preliminary Injunction” (Good Quote) — (6) When Injunction Is Based on “Serious Questions on the Merits” Rather Than “Likelihood of Success,” Court May Rely on Unverified Pleadings and Attached Exhibits to Assess the Merits, Unless the Opponent Has Raised Substantial Questions (Here, the Opponent Failed to Request an Evidentiary Hearing) — (7) Whether Amended Pleading Moots An Appeal Turns on Whether It Materially Changes the Substantive Basis for the Appeal — (8) Meaning of “In That” (“Used To Introduce A Statement That Explains Or Gives More Specific Information” About A Prior Statement)

RICO: Fraudulent Concealment Must Prevent Discovery of the Injury to Toll Statute of Limitations

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