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Braun v. Schwartz

United States District Court, Third Circuit

August 2, 2013

JEFF BRAUN, Plaintiff,
DANIEL S. SCHWARTZ and DALE WEINGARTEN, JOHN DOES 1 through 10 (fictitious individuals), and ABC ENTITIES 1 through 10 (fictitious entities), Defendants.


STEVE MANNION, District Judge.


Pending before the Court is defendant Dale Weingarten's ("Weingarten") motion for sanctions against plaintiff Jeff Braun ("Braun" or "Plaintiff") pursuant to Federal Rule of Civil Procedure 11; and against Plaintiff's counsel, the law firm of McElroy Deutsch Mulvaney & Carpenter ("McElroy" or the "Law Firm"), pursuant to Rule 11, 28 U.S.C. § 1927, and the Court's plenary authority to sanction attorney conduct. (D.E. 20). Plaintiff opposes the motion. (D.E. 24). The Court has considered the parties' submissions pursuant to Federal Rule of Civil Procedure 78(b), and for the reasons set forth below denies Defendant's motion.


In 2012 defendant Weingarten filed a complaint against plaintiff Braun in the Supreme Court of the State of New York in Washington County. (D.E. 1, Complaint at p 53). Plaintiff Braun subsequently initiated this action on "securities" claims. (D.E. 1, Complaint). Weingarten contends that this case is frivolous and was initiated in bad faith to deprive the New York court of jurisdiction by asserting baseless federal claims. (D.E. 20, at p 3). Also pending is defendant Weingarten's motion to dismiss Plaintiff's federal claims. (D.E. 10).


"[D]istrict courts have broad authority to preserve and protect their essential functions." Republic of Philippines v. Westinghous Electric Corp. , 43 F.3d 65, 73 (3d Cir. 1994). The Federal Rules of Civil Procedure provide several tools that allow district courts to sanction parties or attorneys "who fail to meet minimum standards of conduct in many different contexts." Id . (citing e.g. Fed.R.Civ.P 11 (groundless pleadings and other papers); 16(f)(failing to abide by pre-trial orders); 26(g), 30(g), 37(d), and 37(g)(discovery abuses), 41(b) (involuntary dismissal for failure to prosecute, failure to obey court order or follow rules), 45(f)(disobeying subpoena), 56(g)(providing affidavit in bad faith on summary judgment motion or for delay). The District's Local Civil Rules provide additional tools "in furtherance of its inherent power and responsibility to supervise the conduct of attorneys who are admitted to practice before it...." L.Civ.R. 104.1.[1]

Congress has vested district courts with still more powers to police misconduct. Id . (citing e.g. 18 U.S.C. § 401 (contempt power), 28 U.S.C. § 1927 (punishing attorneys who vexatiously multiply proceedings). These formal rules and statutory sources, however, do not "exhaust a district court's power to control misbehaving litigants." Id . That is because "a district court has inherent authority to impose sanctions upon those who would abuse judicial process." Id . (citing Chambers v. NASCO, Inc. , 501 U.S. 32, 43-44 (1991)).

A. Inherent Authority

The Supreme Court explained in Chambers that a district court's inherent powers "are governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.'" Chambers, 501 U.S. at 43, 111 S.Ct. at 2132 (quoting Link v. Wabash R. Co., 370 U.S. 626, 630-31, 82 S.Ct. 1386, 1389, 8 L.Ed.2d 734 (1962)). "A primary aspect of [a district court's] discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process." I d. The purpose of such sanctions is to enable the Court to control its proceedings, the parties, and counsel, without resorting to the more drastic contempt sanction, and permits a court to sanction an "obstinate" party by shifting to it the fees that were incurred because of its disruptive tactics. Id. at 46.

Inherent powers, "[b]ecause of their very potency... must be exercised with restraint and discretion." Chambers, 501 U.S. at 44, 111 S.Ct. at 2132, 115 L.Ed.2d at 45. Consequently, a district court must ensure that there is an adequate factual predicate before flexing its substantial muscle under its inherent powers. Republic of Philippines , 43 F.3d at 74. It must also ensure that any sanction imposed is tailored to address the harm identified. Id.

When exercising these inherent powers, a court should be guided by the same considerations used in the imposition of sanctions under the Federal Rules. Id . For example, bad faith conduct is required for shifting counsel fees under the Federal Rules, and thus is an appropriate standard for shifting fees under inherent authority. Id. at 74 n.11. A finding of "bad faith conduct" is, however, not a prerequisite for the exercise of inherent authority when fee-shifting is not the sanction imposed. Id . Thus, lesser sanctions may be imposed without a showing of bad faith.

The Third Circuit's procedure for sanctions prescribes that prior to a district court imposing sanctions, it first consider the conduct at issue and explain why the conduct warrants sanction. Id. at 74. The Circuit noted that a pattern of wrongdoing may require a stiffer sanction than an isolated incident; a grave wrongdoing may compel a more severe sanction than might a minor infraction; and wrongdoing that actually prejudices the wrongdoer's opponent or hinders the administration of justice may demand a stronger response than wrongdoing that, through good fortune or diligence of court or counsel, fails to achieve its untoward object. Furthermore, there may be mitigating factors that must be accounted for in shaping the court's response. [Id.]. Furthermore, any sanctions imposed should be imposed solely because of the attorney's own improper conduct without considering the conduct of the parties or any other attorney. Martin v. Brown , 63 F.3d 1252, 1265 (3d Cir. 1995).

"Second, having evaluated the conduct at issue, the district court must specifically consider the range of permissible sanctions and explain why less severe alternatives to the sanction imposed are inadequate or ...

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