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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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Rule 11 Sanctions for Filing Claims Barred by Statute of Limitations (An Affirmative Defense) and § 1927 Sanctions for Filing Duplicative Lawsuits

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Erwin v. Russ, 2012 U.S. App. LEXIS 11101 (5th Cir. June 1, 2012):

Erwin, along with twenty-three other plaintiffs (collectively the "Plaintiffs") sued Bryan F. Russ, Jr. and fifty-three other defendants (collectively the "Defendants") for their roles in an alleged grand conspiracy involving a Texas state judge and Russ' law firm ("The Firm") that, according to the complaint, taints all litigation associated with Russ' law firm or filed in Robertson County Court. The district court granted each defendant's motion to dismiss, denied the Plaintiffs' motion to amend, and awarded sanctions and attorney's fees against the Plaintiffs. We AFFIRM the ruling of the district court. ***

3. Sanctions

The district court awarded $25,000 in sanctions and attorney's fees based on 42 U.S.C. § 1988(b), 28 U.S.C. § 1927, and Rule 11. 1 Plaintiffs claim that the sanctions and fees could not have been proper under § 1988, which permits winning parties under § 1983 to collect attorney's fees, because § 1983 only purports to provide attorney's fees to successful plaintiffs. They argue the sanctions and fees imposed on attorneys under § 1927 may only be imposed with prior notice to the attorney. Finally, they contend, citing to out-of-circuit authority, that the court may not grant Rule 11 sanctions sua sponte.

The Supreme Court has permitted attorney's fees to defendants in § 1983 cases for frivolous claims. Fox v. Vice, 131 S. Ct. 2205, 2213 (2011). This court has permitted sanctions against an attorney under § 1927 for "the persistent prosecution of a meritless claim" so long as " the entire financial burden of an action's defense" was not shifted. Browning v. Kramer, 931 F.2d 340, 345 (5th Cir. 1991) (citations omitted). Given the filing of this lawsuit in two jurisdictions, the expansion of the suit to parties well outside the alleged main conspiracy, and the district court's finding that "no responsible attorney would have included the baseless claims raised in these lawsuits," the district court did not abuse its discretion.

Finally, Rule 11 permits sanctions when attorneys unreasonably pursue frivolous or groundless suits. The district court identified the sanctionable conduct:

[A]ll Plaintiffs' RICO claims were frivolous because they failed to identify a RICO enterprise and they failed to identify specific actions which constitute a pattern of racketeering activity. All Plaintiffs' § 1983 and state conspiracy claims were frivolous . . . . the majority of the claims asserted by Plaintiffs are barred by limitations. . . . adding in a variety of unrelated plaintiffs with unrelated claims, such as child custody disputes and false arrest charges, clearly shows that Plaintiffs' attorney multiplied the proceedings 'unreasonabl[y] and vexatiously' to the extent that costs and attorneys' fees were incurred by the Defendants.

By finding that every claim should be dismissed, identifying the multitude of superfluous defendants, and pointing to the filing of this suit in multiple district courts, the district court justified its imposition of sanctions. The Plaintiffs and their attorney opened themselves up to the possibility that they would be forced to pay attorney's fees and sanctions by filing frivolous claims against parties only tangentially related to the alleged conspiracy. The district court did not abuse its discretion in awarding $25,000 in fees and sanctions.

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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)

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(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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