The opinion of the court was delivered by: JEROME SIMANDLE, District Judge
This matter comes before the Court on Defendants' motion for
sanctions, attorneys' fees and costs against Plaintiff's counsel,
pursuant to 28 U.S.C. § 1927. The principal issue to be decided
is whether Defendants have demonstrated that Plaintiff's counsel
vexatiously multiplied the proceedings by persisting in
prosecuting claims for monetary damages that were not factually
supportable. For the reasons discussed herein, Defendants' motion
will be granted in part.
I. INTRODUCTION AND FACTUAL BACKGROUND
The facts of this case are well-known to the parties. The facts
pertinent to the motion now before the Court are given here.
Plaintiff Lino Alphonso was a sales representative who worked
in Pitney Bowes' office in Delran, New Jersey, from January 1997
until June 9, 1999, when he was terminated. He alleged that his
termination constituted unlawful retaliation under the New Jersey
Law Against Discrimination ("NJLAD" or "LAD"), N.J.S.A. 10:5-1,
et seq. He further alleged he had engaged in protected
activity by repeating to management some unkind remarks he
allegedly had heard co-workers say about an African-American
manager who had recently been promoted. After Defendant Norm
Sommer terminated him for making inappropriate remarks and
unfounded accusations, Plaintiff was unemployed for two months
and started a new job (actually, a series of new jobs through
2002) at higher pay.
Plaintiff's complaint was filed in the Superior Court of New
Jersey, Burlington County, on June 8, 2001, and it was properly
removed to this court by Defendants based on diversity of
citizenship, 28 U.S.C. § 1332, on July 16, 2001, where it was
assigned to the Honorable Stanley S. Brotman. The case was
reassigned to the undersigned on October 2, 2003, and the jury
trial commenced on December 8, 2003.
On December 22, 2003, after nine days of trial and a short
deliberation, the jury returned a defense verdict in favor of
Pitney Bowes and against Lino Alphonso. The jury unanimously
found that Mr. Alphonso had not engaged in "protected conduct"
and, therefore, had no basis for his retaliation claim against
Pitney Bowes. While Pitney Bowes, as the prevailing party, could
pursue a petition for fees, it has chosen to forego that option
and instead moves, under 28 U.S.C. § 1927, against Plaintiff's
counsel based upon certain conduct in which they engaged during
the prosecution and trial of this case that Defendants allege was
so unreasonable and vexatious as to constitute bad faith and
The applicable statute, 28 U.S.C. § 1927, provides, "[a]n
attorney . . . who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses and attorneys' fees
reasonably incurred because of such conduct." The statute is
designed to hold counsel accountable where they intentionally and
unnecessarily delay and multiply the proceedings. See Beatrice
Foods Co. v. New England Printing & Lithographing Co.,
899 F.2d 1171 (1st Cir. 1990).
Defendants argue that this is exactly what happened in this
case. First, Defendants assert that Plaintiff's counsel refused
to drop Plaintiff's claim for post-1999 economic damages when the
claim was clearly frivolous. Next, Defendants argue that
Plaintiff's counsel refused to drop Plaintiff's claim for
post-1999 emotional distress damages until after they had
elicited from Plaintiff the testimony at trial about continual
distress that they wanted the jury to hear and then limited the
claim to 1999 to prevent Defendants from countering that
testimony with evidence that seriously undermined the credibility
of Plaintiff's testimony. Finally, Defendants contend that
Plaintiff's counsel made incessant and unprincipled arguments to
preclude the taking, and Defendants' use, of the de bene
esse deposition of Edward Logan. Each of these actions,
Defendants state, caused Pitney Bowes to incur unnecessary
expense, and are sanctionable under Section 1927.
As early as September 13, 2001, Pitney Bowes, through its
counsel, warned Mr. Sandler that it would hold him accountable if
his objectionable conduct continued. By that date, Mr. Sandler
had unreasonably prolonged discussions over the preparation of a
Joint Discovery Plan, tried to block Pitney Bowes' routine
service of subpoenas on Plaintiff's post-Pitney Bowes employers
and refused to provide Pitney Bowes the authorizations to obtain
medical records that then Magistrate Judge Kugler told him he
must provide. Pitney Bowes' counsel wrote Mr. Sandler and warned:
I do not want this litigation to be fraught with
continual and unnecessary battles over matters
concerning which there should be no legitimate
disagreement. The result will only be inflated
litigation costs for which we think your client will
ultimately bear the financial burden. But, in the
short term, if we have to unnecessarily involve the
Court in resolving commonplace issues, we will need
to seriously entertain the prospect of sanctions. I
state this not as a threat, but as a fact, and with
the hope that the sounding of this cautionary note
will facilitate the reasonable conduct of this case
as we proceed.
(Def. Ex. A, 9/13/01 Levering to Sandler Letter at p. 2).
Plaintiff's counsel oppose this motion, arguing generally that
the positions they advocated were not taken in bad faith and
that, if the claims were as lacking in substance as Defendants
now claim, defense counsel expended too much time and money in
efforts to defend them, as discussed further below.*fn2
A. Attorney Conduct Concerning Plaintiff's Claim for Lost
Defendants assert that Plaintiff's counsel refused to genuinely
assess Plaintiff's claim for lost earnings by either learning or
appropriately acknowledging that Plaintiff's earnings from other
employers exceeded what he would have earned from Pitney Bowes.
Plaintiff was required to provide a damages calculation with his
initial disclosures. See Fed.R.Civ.P. 26(a)(1)(C). Mr.
Sandler did not, and Pitney Bowes pressed for this information.
(Def. Ex. B, 8/20/01 Woolf to Sandler Letter). At the initial
scheduling conference on August 22, 2001, then Magistrate Judge
Kugler asked Mr. Sandler to substantiate his settlement demand of
$200,000 plus attorneys' fees. Mr. Sandler could not.
On September 27, 2001, Pitney Bowes' counsel provided to Mr.
Sandler the documents it obtained from SCI, Plaintiff's first
post-Pitney Bowes employer. The documents showed that Plaintiff
was unemployed for only two months, that he had earned more money
at SCI than he earned at Pitney Bowes, and that Plaintiff had
abandoned his job at SCI, his first after Pitney Bowes, thereby
disqualifying himself from future loss. See Weiss v. Parker
Hannifan Corp., 747 F. Supp. 1118, 1132 (D.N.J. 1990). Pitney
Bowes' counsel asked Mr. Sandler to limit Plaintiff's claim for
lost earnings. (Def. Ex. C, 9/27/01 Levering to Sandler Letter).
Mr. Sandler refused and chose instead to press ahead with
Plaintiff's unrestricted claim for continued lost
On April 26, 2002, Pitney Bowes' counsel confirmed in writing
that it would seek sanctions under Section 1927 against Mr.
Sandler at the conclusion of this case:
I've told you before, and I will say it again with
even more conviction: when this case ends, we will
seek sanctions against you to the fullest extent
available. Your conduct in this case has been
obstreperous, and now duplicitous. There will be a
* * *
Rarely in my 25 years of practice have I written so
stern a letter. But your conduct today, and
throughout the case, clearly warrants it. I strongly
suggest you invest the time to look into
28 U.S.C. § 1927 and other statutes and rules authorizing
(Def. Ex. D, 4/26/02 Levering to Sandler Letter).*fn4
Sandler persisted and retained an expert in an attempt to support
Plaintiff's economic damage claim. The expert, Dennis Meyerson,
an accountant who had failed his CPA exam (Def. Ex. E, Transcript
of April 30, 2002 Deposition of Dennis Meyerson at 71) produced a
report augmenting Plaintiff's damages, claiming that Plaintiff
would have been promoted had he remained at Pitney Bowes. The
post-termination wage loss was calculated at $535,079 based on
the assumption that Plaintiff (who earned $36,584 in his last
full year of employment in 1998)*fn5
would have become a
manager in 2005 at an expected salary of $86,550.
Pitney Bowes deposed Mr. Meyerson, who knew nothing about
Pitney Bowes' criteria for promotion (id. at 87-88), was not
aware of any promotion opportunities for which he assumed
Plaintiff qualified (id. at 87) and had no information about
how or what Pitney Bowes pays its managers (id. at 149). He
admitted that he just assumed that Plaintiff would have been
promoted in 2005 because Plaintiff told him so. (Id. at 86-88).
He also stated that the post-promotion salary he projected of
$86,550 was purely hypothetical and not based on Pitney Bowes
actual compensation system. (Id. at 148-49). Mr. Meyerson
subsequently agreed that, absent a promotion, Plaintiff suffered
no lost earnings through at least 2004 five years after
Plaintiff's termination. (Id. at 146-47).
On May 3, 2002, Defendants' counsel summarized Mr. Meyerson's
deposition testimony in a letter to Mr. Sandler. Ms. Levering
wrote, inter alia, "It now appears clear that, even under the
best of circumstances, Mr. Alphonso only can lay claim to, at
best, a $9,388 loss." (Def. Ex. F, 5/3/02 Levering to Sandler
Letter). Despite the fact that Mr. Meyerson's deposition
testimony undermined the conclusions in his report, Mr. Sandler
did not withdraw Mr. Meyerson as a witness or limit Plaintiff's
economic damages claim. Indeed, Mr. Sandler ignored Pitney Bowes'
counsel's efforts to avoid unnecessary costs and instead pressed
As a result, costs escalated. Faced with Plaintiff's counsel's
insistence on calling Mr. Meyerson as an expert, Pitney Bowes
engaged a forensic economist, Jerome Staller, Ph.D., and incurred
the expense of providing a report that stated that Plaintiff had
no viable claim to any economic loss after 1999. Long after
Defendants produced this export report, Plaintiff's counsel
attempted to add another expert to further buttress their claim.
On March 10, 2003, the day before the Final Pretrial
Conference, and over a year after the close of discovery, Mr.
Sandler added Andrew Verzilli, Ph.D., to Plaintiff's witness list
on the working draft of the Final Pretrial Oder to testify in
"rebuttal" to Dr. Staller. This caused Pitney Bowes to incur
additional expense. Dr. Verzilli was never timely identified as
an expert; Rule 26 disclosures were never made; and no rebuttal
report was ever prepared, timely or otherwise. Yet, oddly enough
(given the clear mandates of Rule 16(a) and 26(a)(2) regarding
timely disclosure of expert's identities and reports), Mr.
Sandler insisted that Dr. Verzilli could testify at trial. Pitney
Bowes was forced to file a motion in limine to preclude his
testimony, which Magistrate Judge Donio granted. (Def. Ex. G,
11/14/03 Order at p. 2).
Plaintiff's counsel pursued Plaintiff's claim for economic
damages, unrestricted in scope, into trial. Only after Pitney
Bowes incurred the expense of preparing to defend against
Plaintiff's lost earning claim did Plaintiff's counsel drop the
claim for any lost earnings after 1999 and tell Defendants'
counsel, on the last day of Plaintiff's presentation of his case
in chief, that they were not calling Mr. Meyerson to testify.
B. Conduct Concerning Plaintiff's Emotional Distress Damages
Defendants contend that Plaintiff's counsel pursued a
hopelessly compromised claim for unrestricted emotional distress
damages. First, Defendants accuse Plaintiff's counsel, Mr.
Sandler, with knowingly concealing the truth about Plaintiff's
consultation with mental health professionals. Defendants sought
executed medical authorizations so that counsel could obtain
Plaintiff's medical records and investigate for themselves
Plaintiff's claim of emotional distress. Although Mr. Sandler
insisted that he obtain the records and provide Defendants'
counsel copies, Defendants' counsel did not want Mr. Sandler to
filter what Defendants could see. Defendants were forced to raise
the issue with then-Magistrate Judge Kugler, who instructed Mr.
Sandler to provide Defendants with authorizations. Mr. Sandler,
however, sent the authorizations to the medical providers and
directed them to furnish him, not Defendants, with those records.
Only after Defendants involved Judge Kugler again did Mr. Sandler
provide the necessary authorizations.
In response to Pitney Bowes' interrogatories, Mr. Sandler wrote
that Plaintiff had seen at least two physicians, as well as his
sister-in-law, for psychological treatment after his termination.
(See Def. Ex. H at p. 8, #11). Plaintiff's counsel also
represented that Plaintiff had newfound problems with
sleeplessness and headaches caused by his termination. (Def. Ex.
I, Plaintiff's Statement of Material Facts in Opposition to
Defendants' Motion for Summary Judgment at pp. 9-10, ¶ 22). The
medical records, however, reveal that Plaintiff had headaches
dating back to 1993, and that he had never sought any medical
attention for sleeplessness.
On January 14, 2002, Defendants conducted the deposition of
Plaintiff's wife, Angelina Guieb-Alphonso. Defendants contend
that Mr. Sandler said that, despite what the medical records
established, Plaintiff's wife would substantiate Plaintiff's
claim that he had serious headaches and sleeplessness caused by
his termination. Ms. Guieb-Alphonso's testimony was just the
opposite. She confirmed that Plaintiff had headaches and
sleeplessness before he separated from Pitney Bowes and that his
headaches were not "as bad" after his termination, and that his
sleep pattern was no different. Her deposition transcript
Q: And after he left the employ of Pitney Bowes in
June 1999, did [Plaintiff's] headaches continue?
A: They continued it's not as bad as previous
Q: So they continued but they weren't as bad as they
had been when he was actually working at Pitney
Bowes; is that right?
A: Right. Right.
* * *
Q: . . . Now, after his termination of employment
from Pitney Bowes, was there any change in his
getting up in the middle of the night and his sleep
(See Def. Ex. J, Guieb-Alphonso Tr. at 36, 60). Defendants
further argue that Mr. Sandler attempted to change Ms.
Guieb-Alphonso's testimony through an errata sheet he wrote. The
testimony "it's not as bad as previous", changed to "it's worse
than previous" and "right, right" changed to "no." (Def. Ex. K,
Guieb-Alphonso Errata Sheet). Although listed among Plaintiff's
witnesses, Ms. Guieb-Alphonso was not called to testify at her
Plaintiff's counsel sought to buttress this claim by engaging
an expert and forcing Defendant to do the same. Plaintiff's
expert was Andrew F. Jensen, Ph.D. Plaintiff's counsel failed to
provide Dr. Jensen any medical records; failed to tell Dr. Jensen
of Plaintiff's wife's testimony; failed to provide Dr. Jensen
with the medical records showing that Plaintiff did not complain
of any stress or anxiety post-termination; failed to provide him
Plaintiff's self-assessment in September 2001, just three months
after Plaintiff's counsel filed the Complaint claiming continual
emotional distress, that he had no psychological or sleep
problems; and failed to provide Dr. Jensen with Plaintiff's
post-Pitney Bowes employment records that showed that Plaintiff
had other stressors that could have caused Plaintiff's supposed
Plaintiff's problems at his post-Pitney Bowes employers were
serious: Plaintiff was counseled, among other things, for lying
to his supervisor about whether he actually had made appointments
with clients, for leaving "nasty" voicemail messages for his
supervisor, for telling a customer to "pretend" she was someone
else so that she ...