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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.
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§ 1927 Sanctions — Where Court Orders § 1927 Sanctions on Motion and Movant Does Not Oppose Vacatur of Award of Movant’s Own Costs and Fees, Award Should Be Vacated (Reversing Refusal to Do So)

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Coniglio v. Chesapeake Exploration LLC, 2016 U.S. App. LEXIS 8871 (6th Cir. May 12, 2016):

Attorneys from the law firm Tzangas, Plakas & Mannos, Ltd. ("TPM") appeal the district court's order imposing 28 U.S.C. § 1927 sanctions for vexatious multiplication of the proceedings. TPM represented Plaintiffs Frank and Joseph Coniglio in this action arising out of an ongoing dispute over rights under an oil and gas lease. Plaintiffs own land in Ohio that is subject to an oil and gas lease, the rights under which were assigned to Chesapeake Exploration L.L.C. and CHK Utica, L.L.C. ("Chesapeake"). Plaintiffs and Chesapeake were engaged in ongoing litigation concerning their differing views of Chesapeake's rights under the lease. When Chesapeake's contractor began work on a pipeline on Plaintiffs' land, Plaintiffs [*2]  obtained a temporary restraining order against the contractor in state court. The contractor removed the case to federal court, Chesapeake intervened, and the district court dissolved the TRO.

Chesapeake moved for costs and fees under § 1927 for, inter alia, TPM's failure to name Chesapeake as a defendant. The district court granted the motion, but did not determine the amount of costs and fees to be awarded. The parties later settled the remaining merits issues, and the district court dismissed the matter with prejudice. However, the district court retained jurisdiction over the sanctions award and scheduled an evidentiary hearing. TPM then filed an unopposed motion to vacate the sanctions order, and offered two alternative orders: one vacating the order for sanctions and one awarding $1. While this motion was pending, counsel for Chesapeake emailed the district court to acknowledge the unopposed motion to vacate, together with the two proposed orders, "entry of either of which will bring the outstanding issues to a close." R. 132-1, Email, PID 4028. Counsel informed the court that the parties had "arrived at an agreed-upon amount of fees and costs to be paid by Tzangas Plakas Mannos, Ltd. [*3]  in connection with the Fees Order," and asked the court to cancel the evidentiary hearing. Id. The district court denied the unopposed motion to vacate, concluding: "By voluntarily settling the amount of fees to be awarded, counsel for Plaintiffs have forfeited any right to seek vacatur." R. 132, Order, PID 4027. In the alternative, the district court ruled that the motion failed on the merits. The court refused to enter either order offered by Plaintiffs, and "decline[d] to enter any award with respect to its fee order." Id. at PID 4026 (emphasis added).

TPM appeals the sanction award and the denial of its motion to vacate. Pursuant to the settlement agreement, Chesapeake does not oppose the appeal. Chesapeake Br. 2 ("[P]ursuant to the settlement, Chesapeake did not oppose Appellants' motion in the district court seeking reconsideration or vacatur of the portion of the July 16 Order related to costs and fees, and Chesapeake does not oppose Appellants' appeal."). Given that the district court ordered the § 1927 sanctions on Chesapeake's motion, and that Chesapeake does not oppose vacatur of an award of its own costs and fees, we find no reason to deny the relief requested.

Accordingly, we VACATE the district [*4]  court's order imposing § 1927 sanctions against TPM for its failure to name Chesapeake as a defendant in the complaint.

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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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