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§ 1927 Sanctions Imposed in Action 1 for Filing Action 2 Based on Same Occurrences, Despite the Fact that Action 2 Was Never Served and the Court Lacked Personal Jurisdiction over Certain of the Action 2 Defendants

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Thurmond v. Wayne Cnty’s Sheriff Dep’t, 2014 U.S. App. LEXIS 8190 (6th Cir. April 28, 2014);

On remand, the district court re-imposed the sanction of attorney's  [*27] fees in the amount of $4,080 on Thurmond's counsel. The court based the sanction on its finding, under 28 U.S.C. § 1927, that Thurmond's counsel had engaged in contumacious conduct when he unreasonably and vexatiously multiplied proceedings. The offensive conduct consisted of counsel's January 22, 2008 filing of an "unviable and duplicate" complaint in a new action, Thurmond v. Wayne County, et al., E.D. Mich. No. 2:08-cv-10309, based on the same occurrences that are the subject of the instant action. R. 144, Order at 11-12, Page ID # 2960-61. This filing was deemed to have caused counsel for Wayne County, one of the named parties common to both actions, to incur unnecessary expenses in defending against the new action by filing a motion to dismiss and a motion for sanctions, before Thurmond's counsel finally stipulated to dismiss the complaint in December 2008. We review for abuse of discretion. Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642, 644 (6th Cir. 2006).

Thurmond's counsel does not contend there was any legitimate purpose for filing the new action. Rather, he contends the court lacked jurisdiction to impose the sanction and that the County's expenses  [*28] were not reasonably incurred, because the new complaint was never served on any of the defendants. Irrespective of the court's personal jurisdiction over the named defendants in the new action, the court clearly had jurisdiction, as a collateral matter, to impose a sanction under 28 U.S.C. § 1927 on an attorney appearing before it who abused the judicial process. See Red Carpet Studios, 465 F.3d at 644-45. We flatly reject the jurisdictional challenge.

Nor do we find any abuse of discretion in the imposition of the sanction. Thurmond's counsel had ignored opposing counsel's reasonable requests to voluntarily withdraw the complaint, necessitating the filing of a motion to dismiss and motion for sanctions. Thurmond's counsel had also failed, without excuse, to timely comply with the court's order to file written responses to the two motions. E.D. Mich. No. 2:08-cv-10309, R. 4, Order to Respond, Page ID # 275. He finally agreed to voluntarily dismiss the complaint only after being confronted by the district court in a hearing on December 9, 2008, eleven months after the complaint was filed. E.D. Mich. No. 2:08-cv-10309, R. 18, Hearing Tr., Page ID # 343. We find no error in the district  [*29] court's ruling that Thurmond's counsel needlessly and unreasonably multiplied proceedings. The sanction imposed is measured and not unreasonable.

 

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Criminal Spoliation Can Be A Due Process Violation — Defendant Must Show That (1) The Evidence Had Exculpatory Value Before It Was Destroyed, (2) Defendant Is Unable to Obtain Comparable Evidence by Reasonable Means, and (3) Bad Faith Failure to Preserve

1) Rule 11 Sanctions: “No First Amendment Exception to a Rule 11 Violation” — “[T]he First Amendment Covers Novel, Nonfrivolous Arguments, But Many Frivolous Arguments Are Also Novel” (Good Quotes) — Frivolous To Continue To Make Rejected Novel Arguments; (2) FRAP 38 Sanctions: District Court In Best Position to Set Sanctions, Attorney’s Fees and Costs

3 Prerequisites for Inherent Power and § 1927 Sanctions in Second Circuit: (1) Bad Faith, (2) Conduct That Is Entirely Without Color [Thus, An Ill-Motivated Colorable Position Appears to Be Protected in the Second Circuit], and (3) Improper Purpose— “To Gain A Strategic Advantage” Is An Improper Purpose — Due Process Satisfied by Opponent’s Motion and Multiple Court Conferences, After Which Target Was Allowed to Submit Additional Letters

Inherent Power Sanctions — Untimeliness as Laches — Laches Properly Applied to Deny Sanctions Motion — Note Waived Defenses to Laches

Rule 37(c)(1) Sanctions: Substantial Justification or Harmless Error (Ninth Circuit Factors) — Erie: When State Supreme Court Has Not Squarely Addressed an Issue, Circuit Must Predict How It Would Rule, Using Intermediate Appellate Decisions, Decisions from Other Jurisdictions, Statutes, Treatises And Restatements for Guidance

(1) Appellate Review of Inherent Power Sanctions (7th Circuit): Factual Findings Reviewed for Clear Error, Choice of Sanction for Abuse of Discretion — 4-Element Test for Reversal; (2) Sanctions and Class Actions: Monetary Sanctions Properly Imposed on Defendants for Improper Communications with Class Members (Represented Parties) — “[I]f The Class And The Class Opponent Are Involved In An Ongoing Business Relationship, Communications From The Class Opponent To The Class May Be Coercive” (Good Quote); (3) Monetary Sanctions under Goodyear v. Haeger: If Same Fact-Gathering Would Have Been Conducted Absent The Misconduct, No But-For Causation — But Only “Rough Justice” Required, “Not Accountant-Like Precision” (Good Quote) — Once Misconduct Is Clear, Time Spent Ferreting It Out Compensable under Goodyear; (4) Goodyear Did Not Overrule Long-Standing Rule That Courts May Impose Modest Civil Monetary Sanctions to Curb Litigation Abuse; (5) Appellate Jurisdiction Lacking Where Sanctioned Attorney Fails to File Notice of Appeal and Lawyer’s Intent to Appeal Not Apparent from Client’s Notice; (5) Rule 11 Improper Purpose — Party May Have Many Purposes for Pursuing Claim — As Long As Claim Is Supported by Good Faith Belief in the Merits, “A Parallel Reason Does Not Violate Rule 11” — To Deny A Motion for Sanctions, The District Court Need Not Address Every Argument: “Arguments Clearly Without Merit Can, And For The Sake Of Judicial Economy Should, Be Passed Over In Silence” (Good Quote); Non-Monetary Sanction on Counsel: Complete Twice The Required Amount Of Professional Responsibility Hours For Her Next Continuing Legal Education Cycle Imposed By The State Bar

(1) Spoliation: Sanctions Are Warranted Only If the Movant Establishes That A Reasonable Trier of Fact Could Find That The Destroyed Evidence Would Support A Claim Or Defense — § 1927 Sanctions: “Courts Often Refuse to Award Sanctions When Both Parties Contributed to the Waste of Judicial Resources” (Good Quote)

No Sanctions Imposed on Counsel Who Submitted A.I.-Generated Phony Cases Without Checking Them in Good Faith on The Mistaken Assumption They Had Been Provided by Highly Respected Co-Counsel Rather Than His Criminally-Convicted, Disbarred Client — No Sanctions on Client Who Had No Access to LEXIS or Westlaw to Check the Phony Cases and Submitted Them in Good Faith: “It Would Have Been Downright Irrational For Him To Provide Fake Cases For [His Lawyer] To Include In The Motion Knowing They Were Fake —

(1) Electronic Spoliation — Rule 37(e)(2) Dismissal Sanction — Temporal Proximity of Spoliation to Production Due Date = Circumstantial Evidence of Intent; (2) While Discovery Sanctions Are Reviewed For Abuse Of Discretion, Findings Of Fact Related To Discovery Sanctions Are Reviewed For Clear Error; (3) Dismissal under Rule 37(e)(2) Plus Attorney’s Fees under Inherent Power Appropriately Combined [But see 2015 Advisory Committee Note: “New Rule 37(e) … authorizes and specifies measures a court may employ if information that should have been preserved is lost, and specifies the findings necessary to justify these measures. forecloses reliance on inherent authority or state law to determine when certain measures should be used.”]; (4) Compensatory Sanctions under Goodyear v. Haeger Appropriately Include Fees and Costs Resulting from Attempts to Settle Spoliation Motion

(1) FRAP 38 Sanctions Inapt for Appeal That Is Weak — “Borderline Frivolous” — Test Is Whether Appellant Should Have Known the Appeal Had Absolutely No Chance of Success — (2) Lay Opinion Testimony under Rule 701: Nub of Helpfulness Requirement Is to Exclude Testimony When the Witness Is No Better Suited Than the Jury to Assess the Issue; (3) Appeals: No Appeal from Denial of Motion for Judgment As a Matter of Law Unless Appellant Made That Motion Before Case Was Submitted to Jury

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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.

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