Gibson et al v. Credit Suisse Securities USA, LLC et al

Filing 352

MEMORANDUM DECISION AND ORDER granting 253 Sealed Motion; denying 302 Motion for Attorney Fees; granting 246 Sealed Motion. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (krb)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO

L.J. GIBSON, BEAU BLIXSETH, AMY KOENIG,
VERN JENNINGS, MARK MUSHKIN,
MONIQUE LEFLEUR, and GRIFFEN
DEVELOPMENT, LLC, JUDY LAND, and
CHARLES DOMINGUEZ, each individually, and
on behalf of others similarly situated

Case No.: CV 10-1-EJL-REB
MEMORANDUM DECISION AND
ORDER RE:
CUSHMAN & WAKEFIELD’S
MOTION FOR SANCTIONS

Plaintiffs,
(Docket No. 246)
vs.
CREDIT SUISSE AG, a Swiss corporation;
CREDIT SUISSE SECURITIES (USA), LLC, a
Delaware limited liability company, CREDIT
SUISSE FIRST BOSTON, a Delaware limited
liability corporation; CREDIT SUISSE CAYMAN
ISLAND BRANCH, an entity of unknown type;
CUSHMAN & WAKEFIELD, INC., a Delaware
corporation and DOES 1 through 100 inclusive,

CREDIT SUISSE’S MOTION FOR
ORDER TO SHOW CAUSE
(Docket No. 253)
PLAINTIFFS’ MOTION FOR
AWARD OF ATTORNEYS’ FEES RE:
MOTIONS BY DEFENDANTS
(Docket No. 302)

Defendants.

Currently pending before the Court are the following related motions: (1) Cushman &
Wakefield’s Motion for Sanctions (Docket No. 246); (2) Credit Suisse’s Motion for Order to
Show Cause (Docket No. 253); and (3) Plaintiffs’ Motion for Award of Attorneys’ Fees Re:
Motions by Defendants (Docket No. 302). Having carefully considered the record (including the
parties’ supplemental briefing at Docket Nos. 315, 321, and 322), participated in oral argument
on January 5, 2012, and otherwise being fully advised, the Court enters the following
Memorandum Decision and Order:

MEMORANDUM DECISION AND ORDER - 1

I. BACKGROUND
1.

Plaintiffs initiated this action on January 3, 2010 and, on January 25, 2010 and

January 28, 2010, filed their First and Second Amended Complaints respectively. See Compl.,
First Am. Compl., and Second Am. Compl. (Docket Nos. 1, 12, & 18).
2.

On March 29, 2010, Defendants Cushman & Wakefield, Inc. (“C & W”) and

Credit Suisse AG, Credit Suisse Securities (USA), LLC, Credit Suisse First Boston, and Credit
Suisse Cayman Island Branch (collectively “Credit Suisse”) moved to dismiss Plaintiffs’ Second
Amended Complaint. See C& W & Credit Suisse Mots. to Dismiss (Docket Nos. 48 & 51).
3.

On May 11, 2010, this Court stayed discovery until Defendants’ motions to

dismiss were resolved. See 5/11/10 MDO, pp. 7-8 (Docket No. 73).
4.

On February 17, 2011, the undersigned issued a Report and Recommendation

relating to Defendants’ motions to dismiss. See 2/17/11 Rpt. & Recomm. (Docket No. 106).
5.

On March 25, 2011, while the parties’ respective objections to the undersigned’s

Report and Recommendation were pending before United States District Judge Edward J. Lodge,
Plaintiffs filed a motion for an order authorizing the emergency/expedited issuance of two
subpoenas duces tecum, including one for Michael Miller. See Mot. for Order (Docket No. 118).
Plaintiffs represented to the Court that Mr. Miller had been employed by C & W for 17 years,
including the time period of the appraisals that are one of the central pieces of Plaintiffs’ liability
theories in this case. Plaintiffs’ March 25, 2011 motion stated that Mr. Miller’s testimony “is
highly critical and central to the issues in this case and must be immediately preserved for the
benefit of the class members in their prosecution of this case.” See id. at p. 2.

MEMORANDUM DECISION AND ORDER - 2

6.

In support of Plaintiffs’ March 25, 2011 motion, Plaintiffs’ counsel, Robert C.

Huntley, submitted his affidavit, identifying Mr. Miller as a “key ‘whistle blower-type’ witness,”
while making the following, related representations:
•

Mr. Miller “was willing to come forward with testimony which incriminates both
[C & W] and Credit Suisse of knowingly and intentionally developing and
utilizing the misleading, and likely illegal, Total Net Value (TNV) and Total Net
Proceeds (TNP) appraisal methodologies for the loans to be made to
approximately twenty-two (22) developments in the United States (including Lake
Las Vegas, Yellowstone Club, Tamarack, and Ginn Sur Mer, located in the
Bahamas).”

•

Mr. Miller “was and is of the opinion that the appraisal methodologies were
unique, unaccepted in the industry, and were violative of both FIRREA and
USPAP.”

•

Mr. Miller provided testimony in person to Mr. Huntley and Christopher Conant,
another of Plaintiffs’ multiple attorneys, in a four-hour-long meeting in Denver,
Colorado on March 19, 2011. “Mr. Miller dictated his affidavit” and Mr. Conant
“transcribed [Mr. Miller’s] testimony into his laptop as both men viewed the
monitor and edited his testimony. A copy of [Mr. Miller’s] transcribed testimony
is attached hereto as Appendix A.”

•

“Mr. Miller did not sign the affidavit at that time because he was concerned that
his doing so might result in subjecting himself to retaliation or litigation against
him by C & W. Therefore, he is unwilling to sign his affidavit, but will respond
to a subpoena for a deposition.”

See Huntley Aff. at ¶ 1-5 (Docket No. 118, Att. 2). As referenced above, Mr. Huntley attached to
his own affidavit the unsigned March 19, 2011 “Declaration of Michael L. Miller, MAI” as
Appendix A to his affidavit. See id. at ¶ 4. In essence, then, Plaintiffs requested that the May 11,
2010 discovery stay be lifted to accommodate Mr. Miller’s testimony. See id. at ¶ 6.
7.

On March 31, 2011, Judge Lodge adopted in part and rejected in part the

undersigned’s February 17, 2011 Report and Recommendation. See 3/31/11 Order (Docket No.

MEMORANDUM DECISION AND ORDER - 3

126). As to those claims that Judge Lodge dismissed without prejudice, the Court afforded
Plaintiffs an opportunity to amend their complaint by April 21, 2011. See id. at pp. 29-30.
8.

On April 4, 2011, the undersigned denied Plaintiffs’ March 25, 2011 motion. See

4/4/11 Order, pp. 2-3 (Docket No. 128) (“Plaintiffs offer no compelling reason supporting the
need to immediately proceed with Mr. Miller’s deposition . . . – there is no urgency . . ., when
recognizing the action remains stubbornly positioned at the motion to dismiss stage and, thus, is
not particularly dependent upon any discovery, let alone the requested discovery. Further, there
is no indication that Mr. Miller’s deposition . . . will not be available once the boundaries of the
parties’ claims and defenses are understood after the pleadings are once-and-for-all filed and the
stay is lifted.”).
9.

On April 21, 2011, Plaintiffs filed their Third Amended Complaint. See Third

Am. Compl. (Docket No. 129 & 131). Plaintiffs’ Second Amended Complaint made no mention
of Mr. Miller; however, Plaintiffs’ Third Amended Complaint repeatedly referenced Mr. Miller’s
alleged involvement in matters contributing to Plaintiffs’ claims against Defendants. Compare
Second Am. Compl. (Docket No. 18) with Third Am. Compl. at ¶¶ 60-74, 91-93, & 190 (Docket
No. 129 & 131).
10.

Also on April 21, 2011, Plaintiffs sought to amend their pleadings to resuscitate a

breach of fiduciary duty claim against C & W, despite Judge Lodge’s April 4, 2011 dismissal of
that claim, with prejudice. See Mot. for Leave to Am. Third Cause of Action (Docket No. 130).
In support of their attempt to do so (and consistent with Plaintiffs’ March 25, 2011 motion and
Plaintiffs’ Third Amended Complaint), Plaintiffs stated that “it is appropriate to revive that claim
at this early stage in the case on the basis of the evidence which has come forward from former
MEMORANDUM DECISION AND ORDER - 4

[C & W] employee, Michael Miller.” See id. at p. 2; see also Mem. in Supp. of Mot. to Am., p. 2
(Docket No. 130, Att. 1) (“Very clearly, unknown to Plaintiffs until this past March of 2011,
were the details of [C & W’s] knowing and intentional participation . . . with Credit Suisse to
plan, agree to implement, and implement the appraisal and lending scheme perpetrated against
the Plaintiffs and others.”).
11.

Apparently unbeknownst to either Credit Suisse or C & W (and unbeknownst to

this Court), on or around May 4, 2011, Mr. Miller faxed to Mr. Huntley a copy of an undated
“Affidavit of Michael L. Miller, MAI.” See Ex. 2 to Morrow Decl. in Supp. of C& W’s Mot. for
Recons. (Docket No. 227, Att. 2).1 This affidavit was signed before a notary public licensed in
Missouri. Defendants contend that the signed affidavit is substantively different from Mr.
Miller’s unsigned March 19, 2011 declaration. See id. and compare with Appx. A to Huntley
Aff. (Docket No. 118, Att. 2); see also Ex. 4 to Morrow Decl. in Supp. of C & W’s Mot. for
Recons. (Docket No. 227, Att. 2) (containing red-lined comparison of Mr. Miller’s signed, May
2011 affidavit with Mr. Miller’s unsigned March 19, 2011 declaration).
12.

Also unbeknownst to either Credit Suisse or C & W, Mr. Miller soon thereafter

delivered a second signed “Affidavit of Michael L. Miller, MAI” to his boss Doug Haney, who is
also an expert retained by Plaintiffs. See Exs. 1 & 3 to Morrow Decl. in Supp. of C & W’s Mot.
for Recons. (Docket No. 227, Att. 2). Mr. Haney then forwarded this second signed version to

1

Between the time that (1) Mr. Huntley filed Mr. Miller’s unsigned March 19, 2011
declaration, and (2) Mr. Miller faxed his undated affidavit to Mr. Huntley on or around May 4,
2011, Mr. Miller testified that Plaintiffs’ attorneys – including Mr. Huntley, James C. Sabalos,
and Michael J. Flynn – were calling often (a few times a week), urging Mr. Miller to sign the
unsigned March 19, 2011 declaration as quickly as possible. See 5/31/12 Miller Dep. at 249:13250:9, attached as Ex. A to Abdollahi Decl. in Supp. of C & W’s Mot. for Recons. (Docket No.
245).
MEMORANDUM DECISION AND ORDER - 5

Plaintiffs’ counsel. See id. This subsequent affidavit was signed before a notary public licensed
in Texas and is dated May 9, 2011; however, it appears to be identical in content to the earlier
affidavit faxed to Mr. Huntley on May 4, 2011. For the purposes of this Memorandum Decision
and Order, the Court considers Mr. Miller’s two signed affidavits to be one and the same.2
13.

On May 5, 2011, Defendants C & W and Credit Suisse moved to dismiss

Plaintiffs’ Third Amended Complaint. See C & W & Credit Suisse Mots. to Dismiss (Docket
Nos. 134-139).
14.

On May 25, 2011, Plaintiffs, in response to C & W’s emergency motion to strike

Plaintiffs’ May 13, 2011 motion for partial summary judgment (Docket Nos. 140 & 145), relied
upon Mr. Miller’s unsigned March 19, 2011 declaration in these particulars:
•

“For example, during the Montana Bankruptcy proceedings in In re Yellowstone
Mountain Club, Credit Suisse and [C & W] were well aware of the complaints,
concerns and objections to the lending and appraisal scheme raised by Michael
Miller, a senior appraiser with [C & W]. Miller raised his concerns and objections
regarding the “Total Net Value” appraisal method to his superiors in New York
. . . . Miller also raised the same objection directly with several members of the
Credit Suisse team in Los Angeles who participated in the creation of the scheme
described in the [Third Amended Complaint].”

•

Identifying Mr. Miller as “the person who directly links Credit Suisse and [C &
W] to both the planning and implementation of the scheme.”

•

“The current motions before this Court are therefore not merely procedurally
improper, but a concerted effort to prevent any court from learning what else
Miller will tell this Court (and there is more), and a determined effort to make
sure no court ever concludes that the Defendants violated the laws of the United
States (“FIRREA”) and the laws of the states of Idaho, Montana, Nevada, and
Florida (“USPAP”), which they did.”
2

Although both of the signed documents are labeled as “affidavits,” neither contains a
notary public’s jurat. Rather, both use an acknowledgment form. However, both contain
penultimate language at the end of the document that is in sufficient form to meet the
requirements of a declaration under 18 U.S.C. § 1746.
MEMORANDUM DECISION AND ORDER - 6

•

“In connection with the illegal lending and appraisal scheme in Idaho and at
Yellowstone, Cushman & Wakefield’s appraiser, Dean Paauw, told Miller: ‘. .
.[I’m] not in jail yet and still continuing to write these appraisals . . .’”

See Pls.’ Opp. to Emergency Mot. to Strike, pp. 7-8 (Docket No. 148) (citing Third Am. Compl.
at ¶¶ 57-59 & 70 (Docket Nos. 129 & 131) (emphasis in original)).
15.

On May 31, 2011, Plaintiffs opposed Defendants’ renewed motions to dismiss.

See Pls.’ Opp. to Mots. to Dismiss (Docket Nos. 152-153). In doing so, Plaintiffs relied, in part,
on the allegations raised in their Third Amended Complaint relating to the testimony given in
Mr. Miller’s unsigned March 19, 2011 declaration. See e.g., Pls.’ Opp. to Credit Suisse Mot. to
Dismiss, pp. 24-26 (Docket No. 152); Pls.’ Opp. to C & W Mot. to Dismiss, pp. 8, 10-12, 21-24
(Docket No. 153).
16.

During the January 12, 2012 oral argument on Plaintiffs’ April 21, 2011 motion to

amend and Defendants’ renewed motions to dismiss, Plaintiffs’ counsel, Messrs. Huntley and
Sabalos, made the following arguments vis à vis Mr. Miller and his unsigned March 19, 2011
declaration:
•

“The issue presented by this motion is whether the – with the advent of the new
information we have through the whistle blower and other new allegations in that
Third Amended Complaint, this Court should reinstate the Plaintiffs’ cause of
action against [C & W] for a breach of fiduciary duty . . . .”

•

“The Third Amended Complaint adds information provided by the whistle blower,
Michael Miller. And I won’t – I mention only a couple of highlights here. . . . .”

•

“At paragraph 57 [of the Third Amended Complaint], and I want to talk just a
little bit about what wasn’t here. What wasn’t here before in the last proceeding.
We knew nothing about Mr. Miller. We knew nothing about the conversations
that took place and the meetings and agreements. This is all unique. And one of
the problems with conspiracy we had last time with [C & W] was, in fact, we
didn’t know about Miller and we didn’t have all the details.”

MEMORANDUM DECISION AND ORDER - 7

•

In response to the Court’s question concerning whether Plaintiffs’ breach of
fiduciary duty claim against C & W “has become more plausible than it was at the
time that Plaintiffs [originally] conceded the claim . . . .,” Plaintiffs’ counsel
responded: “That and the whistle blower. And also the affidavit of Mike Haney,
and the affidavits of Miller that they can be considered in connection with this
motion.”

•

“Paragraph 61. Miller begins to raise red flags regarding these new inflated
appraisals. Miller is the senior vice-president or senior executive in charge of the
developments for [C & W] out of Houston, and he’s got many people that work
for him. He now is raising red flags. [C & W] is raising red flags because they are
their employees, they’re authorized agents.”

•

“Paragraph 62, all the things we didn’t know before when Judge Lodge and Your
Honor had us before this Court, Miller, only five months or so after he had
previously appraised Lake Las Vegas, pursuant to USPAP and FIRREA, through
the discounted market value that I just told you about, learns of what is going on,
wants to know why . . . .”

•

At 65 through 69 under the conspiracy, which we didn’t know about before, even
[C & W] changes its TNV to total net proceeds, thinking geez, this could be
alleged to be misleading.”

•

“And I just want to – I’ll just represent, you know, Judge, I know you know
conspiracy. I’m not going to sit here and tell you, but we represent that if it were
conspiracy alone, not just the other materials we have, conspiracy alone we would
have enough to hold [C & W] in here, if the Court lets us come back because we
didn’t know about Miller. We didn’t know about Dean Paauw saying I’m still
doing these appraisals, not yet in jail, telling that to his executive, senior
executive, Mr. Miller, who’s reported to us, who’s coming to this court sooner or
later.”

See 1/12/12 Tr. at 10, 14, 22-23, 70-73, 78 (Docket No. 194).
17.

On February 17, 2012, the undersigned issued a (1) Memorandum Decision and

Order relating to Plaintiffs’ April 21, 2011 motion to amend, and (2) Report and
Recommendation relating to Defendants’ renewed motions to dismiss. See 2/17/12 MDO & Rpt.
& Recomm. (Docket Nos. 197 & 198). Within the February 17, 2012 Memorandum Decision
and Order, the undersigned granted Plaintiffs’ April 21, 2011 motion to amend, stating in
relevant part:
MEMORANDUM DECISION AND ORDER - 8

•

“Since [dismissing Plaintiffs’ breach of fiduciary duty claim against C & W],
however, Plaintiffs claim that new information in the form of an insider account
– namely, from Mr. Michael Miller – reveals a conspiracy between Credit Suisse
and [C & W] to support a breach of fiduciary duty claim against not only Credit
Suisse, but also [C & W].”

•

“Finally, Plaintiffs’ counsel represent as officers of the court that Mr. Miller has
insider knowledge of [C & W’s] alleged coordination with Credit Suisse that
presents a new, different, factual backdrop to Plaintiff’s current breach of
fiduciary duty claim against [C & W].”

See 2/17/12 MDO, pp. 10 & 13 (Docket No. 197). Additionally, within the February 17, 2012
Report and Recommendation, the undersigned recommended that Plaintiffs’ breach of fiduciary
duty claim against C & W not be dismissed. See 2/17/12 Rpt. & Recomm., pp. 32-33 (Docket
No. 198).
18.

On March 30, 2012, Judge Lodge adopted in part and rejected in part the

undersigned’s February 17, 2012 Report and Recommendation. See 3/30/12 Order (Docket No.
210). Of some note here, although Judge Lodge found that Plaintiffs’ Third Amended Complaint
alleged the existence of a conspiracy between Credit Suisse and C & W, he nonetheless
dismissed with prejudice Plaintiffs’ breach of fiduciary duty claims against both Credit Suisse
and C & W. See id. at pp. 15-16 & 23.
19.

On April 27, 2012, C & W first received a copy of the signed, May 2011 Miller

affidavit. See Ex. 1 to Morrow Decl. in Supp. of C & W’s Mot. for Recons. (Docket No. 227,
Att. 2). The copy was obtained from Mr. Miller’s personal attorney, not from counsel for
Plaintiffs. See id.
20.

Also on or around April 27, 2012, Credit Suisse and C & W answered Plaintiffs’

Third Amended Complaint. See Credit Suisse and C & W Ans. to Third Am. Compl. (Docket
Nos. 218, 219, 222 & 235).
MEMORANDUM DECISION AND ORDER - 9

21.

On May 11, 2012, C & W moved for reconsideration of Judge Lodge’s March 30,

2012 Order. See C & W’s Mot. for Recons. (Docket No. 227). In support of its motion to
reconsider, C & W stated that “Plaintiffs’ counsel for a full year have been in possession of a
signed affidavit from supposed ‘whistle blower’ Michael Miller that is materially different from
the ‘unsigned declaration’ Plaintiffs’ counsel drafted and submitted to the Court on March 25,
2011.” See Mem. in Supp. of C & W’s Mot. for Recons., p. 1 (Docket No. 227, Att. 1).
According to C & W, “had the Court known the truth about what [Mr.] Miller actually had
signed, it would have granted C & W’s motion to dismiss in its entirety . . . .” See id. at p. 3.
Thus C & W sought reconsideration of that portion of Judge Lodge’s Order regarding C & W’s
renewed motion to dismiss the Third Amended Complaint that allowed certain claims to proceed
against it. See id.
22.

On June 4, 2012, C & W filed a motion for sanctions, arguing that Plaintiffs

should be sanctioned due to their (and/or their counsel’s) “misconduct in failing to disclose for
more than one year the existence of a signed affidavit from Michael Miller, while at the same
time submitting to the Court and relying on a different, unsigned declaration.” See C & W’s
Mot. for Sanctions, p. 2 (Docket No. 246).
23.

On June 15, 2012, Credit Suisse also moved for reconsideration of Judge Lodge’s

March 30, 2012 Order. See Credit Suisse’s Mot. for Recons. (Docket No. 253). In support of its
motion to reconsider, Credit Suisse also highlighted Plaintiffs’ counsel’s reliance upon Mr.
Miller’s unsigned March 19, 2011 declaration up to that point in the litigation when, in fact, they
were in possession of a later-in-time, signed affidavit from Mr. Miller that was substantively
different from Mr. Miller’s earlier declaration. See Mem. in Supp. of Credit Suisse’s Mot. for
MEMORANDUM DECISION AND ORDER - 10

Recons., pp. 1-2 (Docket No. 253, Att. 1) (“What Plaintiffs did not reveal to the Court, even
while relying repeatedly on the supposed testimony of Mr. Miller in the [u]nsigned [declaration],
was that Miller had actually signed an [a]ffidavit . . . – a modification of the [u]nsigned
[declaration] drafted for him by Plaintiffs’ counsel – in which he deleted key paragraphs,
sentences, and phrases that supposedly supported Plaintiffs’ claims, and substituted materially
different language.”) (emphasis in original). In turn, Credit Suisse moved the Court to (1)
reconsider its denial of Credit Suisse’s renewed motion to dismiss Plaintiffs’ negligence claim in
light of the “Miller revelations,” and (2) order Plaintiffs to show cause as to why they should not
be sanctioned “for misleading the Court in violation of their duty of candor.” See id. at p. 3.
24.

On October 26, 2012, Judge Lodge granted Defendants’ respective motions for

reconsideration, reconsidered its March 30, 2012 Order, but then determined that the Court
“correctly decided the matter in its prior order . . . which remains the decision of this Court on
the motions decided therein.” See 10/26/12 Order, pp. 14-15 (Docket No. 297). However, in
reaching this conclusion, Judge Lodge neither “condone[d] nor ma[de] any ruling one way or
another concerning the actions of counsel” regarding the stated bases for seeking reconsideration.
See id. at p. 13. In other words, the question of whether any sanctions are warranted in relation
to Plaintiffs’ counsel’s handling of Mr. Miller’s declaration/affidavit was referred to the
undersigned for decision.
25.

On November 19, 2012, Plaintiffs moved for an award of attorneys’ fees relating

to unnecessarily having to respond to C & W’s June 4, 2012 motion for sanctions and Credit
Suisse’s June 15, 2012 motion for order to show cause. See Pls.’ Mot. for Award of Att’ys Fees
& Expenses (Docket No. 302).
MEMORANDUM DECISION AND ORDER - 11

26.

On December 5, 2012, the undersigned heard oral argument on (1) C & W’s June

4, 2012 motion for sanctions, (2) Credit Suisse’s June 15, 2012 motion for order to show cause,
and (3) Plaintiffs’ motion for award of attorneys’ fees and expenses. See 12/5/12 Minute Entry
(Docket No. 309).
27.

On December 6, 2012, Plaintiffs filed a motion for leave to file expedited five-

page brief regarding the order to show cause hearing, arguing that “[t]he issue before the Court
has serious consequences, particularly to the integrity and reputation of Plaintiffs’ attorneys as
well as the other considerations articulated in court,” that “[n]o pre-hearing briefs were requested
by either the Court or the parties and the issues are now focused for a meaningful brief,” and that
“[t]here were issues propounded at the hearing which deserve a meaning ful and thoughtful input
from counsel.” See Pls.’ Mot. for Leave, pp. 1-2 (Docket No. 308).
28.

On December 6, 2012, the undersigned granted Plaintiffs’ motion for leave,

reasoning:
The Court struggles with any assessment of the pending motions for sanctions that
does not immediately raise significant issues for Plaintiffs requiring a thorough and
careful response. However, it is possible that the seriousness of the issue raised by
the motions for sanctions, and the sanctions requested by Defendants, were not
apprehended by Plaintiffs’ counsel to the appropriate degree. Given the implications
of the pending motions for all of Plaintiffs’ counsel, and for the claims made in the
lawsuit, the Court will grant the Motion.
See 12/6/12 MDO, p. 2 (Docket No. 311).
29.

On December 10, 2012, Plaintiffs filed their post-hearing brief regarding the order

to show cause hearing, arguing that sanctions should not be imposed. See Pls.’ Post-Hearing
Brief (Docket No. 315).

MEMORANDUM DECISION AND ORDER - 12

30.

On December 13, 2012, Defendants responded to Plaintiffs’ post-hearing brief,

arguing that sanctions should be imposed against Plaintiffs. See Credit Suisse & C & W Resps.
(Docket Nos. 321 & 322).
II. DISCUSSION
The motions decided in this Memorandum Decision and Order concern a nettlesome and
troubling dispute between the parties regarding statements made by Michael Miller – a witness
described by Plaintiffs’ counsel as a “whistle blower” – and a decision made by Plaintiffs’
counsel not to file Mr. Miller’s signed May 2011 affidavit with the Court. When that affidavit
was signed by Mr. Miller, Plaintiffs’ counsel had already presented, relied upon, and filed with
the Court Mr. Miller’s previous, unsigned, and arguably substantively different March 19, 2011
declaration. Defendants contend that by not filing with the Court Mr. Miller’s signed May 2011
affidavit (while consistently relying upon Mr. Miller’s earlier, unsigned March 2011 declaration),
Plaintiffs and their counsel breached duties required of them by Court rules, federal statutes, and
ethical standards.
A.

Imposing Sanctions: Applicable Standards
1.

Federal Rule of Civil Procedure No. 11

In presenting to the court a pleading, written motion, or other paper – whether by signing,
filing, submitting, or later advocating it – an attorney certifies that “it is not being presented for
any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost
of litigation” and that “the factual contentions have evidentiary support or, if specifically so
identified, will likely have evidentiary support after a reasonable opportunity for further
investigation or discovery.” Fed. R. Civ. P. 11(b)(1) & (3).
MEMORANDUM DECISION AND ORDER - 13

In general, if the court determines that FRCP 11(b) has been violated, the court may
impose an appropriate sanction. See Fed. R. Civ. P. 11(c)(1).3 Sanctions under FRCP 11 “must
be limited to what suffices to deter repetition of the conduct or comparable conduct by others
similarly situated” and may include “[(1)] nonmonetary directives;4 [(2)] an order to pay a
penalty into court; or [3] if imposed on motion and warranted for effective deterrence, an order
directing payment to the movant of part or all of the reasonable attorney’s fees and other
expenses directly resulting from the violation.” Fed. R. Civ. P. 11(c)( 4).
FRCP 11 does not enumerate the factors a court should consider in deciding whether to
impose a sanction or what sanctions would be appropriate in any given circumstance. Still, the

3

However, FRCP 11 requires that a party filing a motion for sanctions must serve the
motion on the opposing party 21 days before filing the motion with the court. See Fed. R. Civ. P.
11(c)(1) (“The motion [for sanctions] must be served under Rule 5, but it must not be filed or be
presented to the court if the challenged paper . . . is withdrawn or appropriately corrected within
21 days after service or within another time the court sets.”). This is FRCP 11's “safe harbor”
provision. The Ninth Circuit has held that the procedural requirements of FRCP 11(c)(1) are
mandatory and that the safe harbor provision must be strictly enforced. See Holgate v. Baldwin,
425 F.3d 6671, 677 (9th Cir. 2005). It is not clear whether FRCP 11's safe harbor provision
applies (or, if it did, whether the parties complied with its procedural protocols) – C & W does
not cite to FRCP 11 in support of its motion for sanctions and, while Credit Suisse references
FRCP 11(see Credit Suisse’s Mot. for Order to Show Cause, pp. 14-15 (Docket No. 253, Att. 1)),
its motion is not for sanctions per se but, rather, a motion for order to show cause why Plaintiffs
should not be sanctioned.
4

A non-monetary sanction of dismissal “is an available sanction when ‘a party has
engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings’
because ‘courts have inherent power to dismiss an action when a party has willfully deceived the
court and engaged in conduct utterly inconsistent with the orderly administration of justice.’”
Leon v. IDX Systems Corp., 464 F.3d 951, 958 (9th Cir. 2006) (quoting Anheuser-Busch, Inc. v.
Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995)). “Before imposing the ‘harsh
sanction’ of dismissal, however, the district court should consider the following factors: ‘(1) the
public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets;
(3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition
of cases on their merits; and (5) the availability of less drastic sanctions.’” See id.
MEMORANDUM DECISION AND ORDER - 14

Advisory Committee Notes to FRCP 11 provide that courts have “significant discretion” in such
respects, and may consider “[w]hether the improper conduct was willful, or negligent; whether it
was part of a pattern of activity, or an isolated event; whether it infected the entire pleading, or
only one particular count or defense; whether the person has engaged in similar conduct in other
litigation; whether it was intended to injure; what effect it had on the litigation process in time or
expense; whether the responsible person is trained in the law; what amount, given the financial
resources of the responsible person, is needed to deter that person from repetition in the same
case; [and] what amount is needed to deter similar activity by other litigants[.]” Fed. R. Civ. P.
11, Adv. Comm. Notes (1993).
2.

28 U.S.C. § 1927

Under 28 U.S.C. § 1927, “[a]ny 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.” 28 U.S.C.
§ 1927. The use of the word “may” – rather than “shall” or “must” – gives district courts the
discretionary authority “to hold attorneys personally liable for excessive costs for unreasonably
multiplying proceedings.” Gadda v. Ashcroft, 377 F.3d 934, 943 n.4 (9th Cir. 2004). While the
Ninth Circuit has “‘been less than a model of clarity regarding whether a finding of mere
recklessness alone may suffice to impose a sanction for attorneys’ fees’” under 28 U.S.C. § 1927,
or whether there must be a finding of subjective bad faith, what is clear from the case law is that
“a finding that the attorney recklessly or intentionally misled the court is sufficient to impose
sanctions under [28 U.S.C.] § 1927 . . . .” In re Girardi, 611 F.3d 1027, 1061 (9th Cir. 2010)

MEMORANDUM DECISION AND ORDER - 15

(quoting B.K.B. v. Maui Police Dep’t, 276 F.3d 1091, 1107 (9th Cir. 2002) and citing In re
Keegan Mgmt. Co. Sec. Litig., 78 F.3d 431, 436 (9th Cir. 1996)).
3.

Idaho Rule of Professional Conduct 3.35

“In addition to case law and applicable court rules, courts may consider codes of
professional conduct in determining whether an attorney’s conduct falls below the standards of
the profession and is sanctionable. See Girardi, 611 F.3d at 1035. Idaho Rule of Professional
Conduct 3.3(a)(1) provides that a lawyer shall not knowingly “make a false statement of fact or
law to a tribunal or fail to correct a false statement of material fact or law previously made to the
tribunal by the lawyer.” IRPC 3.3(a)(1); but compare with IRCP 3.3(a)(3) & cmt. 8 (“The
prohibition against offering false evidence only applies if the lawyer knows that the evidence is
false. A lawyer’s reasonable belief that evidence is false does not preclude its presentation to the
trier of fact.”). Consistent with this, a lawyer’s failure to make a disclosure can be the equivalent
of an affirmative misrepresentation. See IRCP 3.3, cmt. 3. Moreover, given a “lawyer’s
obligation as an officer of the court to prevent the trier of fact from being misled by false
evidence” (see IRCP 3.3, cmt. 5), when previously-offered materials turn out to be
false/misleading, a lawyer’s “duty of candor to the tribunal” warrants “reasonable remedial
measures” (see IRCP 3.3, cmt. 10).

5

Under the Local Civil Rules of the District of Idaho, “[a]ll members of the bar of the
District Court . . . for the District of Idaho (hereafter the “Court”) and all attorneys permitted to
practice in this Court must familiarize themselves with and comply with the Idaho Rules of
Professional Conduct of the Idaho State Bar and decisions of any court interpreting such rules.
These provisions are adopted as the standards of professional conduct for this Court but must not
be interpreted to be exhaustive of the standards of professional conduct.” Dist. Idaho Loc. Civ.
R. 83.5.
MEMORANDUM DECISION AND ORDER - 16

4.

Court’s Inherent Powers

“District courts have the inherent power to sanction a lawyer for a ‘full range of litigation
abuses.’” Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1035 (9th cir. 2012) (quoting
Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991)). While a district court’s authority to impose
sanctions under its inherent powers is broad, it is not limitless. “Before awarding sanctions
under its inherent powers . . . the court must make an explicit finding that counsel’s conduct
‘constituted or was tantamount to bad faith.’” Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d
644, 648 (9th Cir. 1997) (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 767 (1980). A
finding of bad faith may be appropriate when, among other things, a party engages in behavior
that has the effect of “delaying or disrupting the litigation or hampering enforcement of a court
order.” Id. at 649 (internal quotation marks omitted).
B.

Analysis
There are, perhaps, some courts in the country where motions of this nature are an

unremarkable occurrence, and where there is no particular noteworthiness attached to either the
bringing of such motions, or to the defense of such motions, or perhaps even to the deciding of
such motions. That is not true in this federal district court, nor in any Idaho state court with
which the undersigned has been associated. The motions present matters of great seriousness,
and the Court has given its full attention to the issues raised, as they implicate threats to the
integrity of the adversarial process, and questions about the proper conduct of lawyers who serve
as officers of the court in seeking a fair and just adjudication of their clients’ disputes.
The Court is convinced, after considering the written and oral argument of counsel, that
there has been a material failure on the part of Plaintiffs’ counsel in their responsibilities to this
MEMORANDUM DECISION AND ORDER - 17

Court, as officers of this Court, in the circumstances underlying the pending motions. The Court
finds that Plaintiffs’ counsel made dramatic, strident, and repeated written and oral
representations to the Court regarding Mr. Miller’s purported testimony, with the unmistakable
intention that such representations be relied upon the Court as it considered dispositive motions
and motions to amend, all motions which were of great significance concerning the claims which
Plaintiffs might be permitted to further pursue against Defendants in this lawsuit.
In addition, the representations made by Plaintiffs’ counsel were cloaked in the credence
of sworn testimony. Plaintiffs’ counsel filed a prepared declaration in the name of Mr. Miller,
but lacking his signature under oath only because of his alleged unwillingness on his part to sign
the declaration for fear of retaliation from his former employer, Defendant C & W. Indeed, that
purported reason was emphasized by Plaintiffs’ counsel as a basis for which the Court should
attach even greater credibility to the testimonial details of Mr. Miller’s unsigned declaration.
According to Plaintiffs, this witness was a whistle blower, privy to the alleged misdeeds of both
Defendants, who considered himself in danger of personal repercussions if he were to talk about
what otherwise might remain unspoken.
There is no question but that Plaintiffs’ counsel sought to color the record before the
Court as such motions were considered and decided, with the particulars of Mr. Miller’s
testimony alleged already to have been obtained, and ready to be cemented into sworn testimony,
but for the fear of retaliation. The unsworn testimony of Mr. Miller was repeatedly referenced in
the Plaintiffs’ filings, and in oral argument to the Court. Whether or not Plaintiff’s
characterization of Mr. Miller’s testimony becomes the smoking gun Plaintiffs contend it to be,
or something less than that, remains to be seen. But once Plaintiffs’ counsel chose to put such a
MEMORANDUM DECISION AND ORDER - 18

box of evidence in front of the Court, they also had an absolute responsibility to inform the Court
and opposing counsel when the shape of that evidence box changed. Having made explicit
representations about the nature of “good as sworn” testimony to the Court, and having made
explicit representations about such testimony not being made under oath because of Mr. Miller’s
alleged whistle blower fears, Plaintiffs’ counsel had a responsibility to inform the Court and
opposing counsel when Mr. Miller placed his testimony under oath.
The argument of Plaintiffs’ counsel that the actual sworn testimony was not substantively
different than the “would be sworn, but for” testimony is unavailing here. The duties of
Plaintiffs’ counsel were to correct the misshapen record before the Court, having once made that
record. If Plaintiffs’ counsel had never presented any unsigned and unsworn declaration to the
Court as if it was as good as sworn upon, as if it carried the same evidentiary reliability as a
sworn affidavit or signed declaration, and if Plaintiffs’ counsel had not repeatedly and
vociferously argued that such evidence should persuade the Court of the rightness of Plaintiffs’
claims, then this issue could be easily dispensed. Plaintiffs’ counsel could have kept silent (in
the limited circumstances at play here, and assuming that there were no discovery requests that
otherwise might have required the production of such a statement), about the fact of the unsigned
declaration, as well as the fact of the later signed documents. But Plaintiffs’ counsel made the
unsigned declaration, and their representations about the integrity and significance of such
evidence, a key part of the record. Once that was done, they also had the immediate and
unmistakable responsibility to make the later-signed affidavit a part of the record, when they first
became aware of its existence.

MEMORANDUM DECISION AND ORDER - 19

Plaintiffs’ counsel also argues that they were justified in deciding not to file the sworn
testimony with the Court, even though they previously had filed the unsworn testimony while
emphasizing that the sworn testimony was unavailable because Mr. Miller feared retaliation.
They argue that the sworn testimony is not substantively different than the unsworn testimony, a
conclusion that is, of course, unilaterally drawn. Neither the Court nor opposing counsel were
made aware of, or provided with a copy of the sworn testimony. Further, the representation that
sworn testimony could not be obtained for fear of retaliation was no longer true at the moment
Mr. Miller signed his affidavit. Whatever rationalizations may have justified that decision in the
minds of Plaintiffs’ counsel, the plain fact is that the decision was mistaken and wrong.
Similarly, the argument that Plaintiffs were prohibited from filing any affidavits because
of the procedural posture of the case (dealing with pending motions to dismiss and a stay upon
discovery while such motions – and motions to amend – were considered and decided) is also
unavailing. Plaintiffs did not follow such a close line when the unsigned declaration was
submitted to the Court in the context of a motion seeking relief from the discovery stay. The
nature of the manner in which the unsigned declaration, and the affidavit of counsel submitted
with it, and then the later written and oral argument based upon it, make clear that the Plaintiffs
intended for the purported testimony of Mr. Miller to be part of what the Court would consider in
deciding then pending motions, and later filed, motions. In fact, as this Memorandum Decision
and Order describes at the outset and as also set forth in Defendants’ motions, the Court did
consider such evidence and argument in making certain of its rulings. Having once muddied that
water, Plaintiffs’ counsel cannot reasonably argue that the Court’s order staying discovery and

MEMORANDUM DECISION AND ORDER - 20

the civil rules’ prohibitions upon consideration of evidence from outside the pleadings on
motions to dismiss constituted a clear barrier to filing Mr. Miller’s signed affidavit.
Accordingly, the Court makes the following specific findings in regard to the failure of
Plaintiffs’ counsel to file the signed statement of Mr. Miller at the time it came into their
possession:
1.

Such a failure is an abuse of the duties owed to the Court, and constituted or was

tantamount to bad faith. Such a failure delayed and hampered the litigation process by presenting
a flawed and arguably false record before the Court, while at the same time asking the Court to
focus upon the flawed portion of that same record as a basis for deciding critical motions in the
case. The Court properly can sanction such failures by Plaintiffs’ counsel under its inherent
powers.
2.

Plaintiffs’ counsel had a duty under Idaho Rule of Professional Conduct 3.3(a)(1)

not to knowingly “make a false statement of fact or law to a tribunal or fail to correct a false
statement of material fact or law previously made to the tribunal by the lawyer.” Plaintiffs’
counsel’s failure to file the signed statement of Mr. Miller, once it was received and in the
context of representations in writing and orally about the facts and circumstances of Mr. Miller’s
unsworn testimony, constituted the equivalent of an affirmative misrepresentation. See IRCP
3.3, cmt. 3. The signed “affidavit” was not the same document as the unsigned declaration. The
statement of fact that the witness, Mr. Miller, would not sign a statement under oath because of
fear of retaliation was no longer true, even if true at the outset, at the moment he did sign the
affidavit. Further, Plaintiffs’ counsel’s failure to remedy such matters is a breach of a lawyer’s

MEMORANDUM DECISION AND ORDER - 21

duty “duty of candor to the tribunal” which warrants “reasonable remedial measures.” See IRCP
3.3, cmt. 10.
3.

Plaintiffs’ counsel’s failure to file the signed statement when it came into their

possession had the inevitable, and intended, effect of unreasonably multiplying the proceedings
in this case pertaining to briefing, argument, consideration and decision upon motions to dismiss,
and motions to amend. Whether or not Judge Lodge ultimately changed any of his decision upon
objections (or reconsideration of his decision) to the undersigned’s Report and Recommendation
dated February 17, 2012 does not change this analysis or the finding made here. The failure to
file the signed affidavit necessarily meant that the nature of the briefing and the argument, and
the court’s consideration of the evidence and decision upon the same, was different than it would
have been with the addition of such evidence to the record. The Court acknowledges that
Plaintiffs’ counsel would have been free to argue, and no doubt would have argued, that the
signed statement was of no different evidentiary importance than the unsigned affidavit. But,
defense counsel would also have the argument that the signed statement was substantively
different, that the characterization of a whistle blower witness worried about retaliation was
unfounded, and the Court would have had that full panoply of evidence and argument to
consider. When the signed statement came to light, a new round of motion practice ensued and
even the very fact of this Memorandum Decision and Order is evidence that proceedings have
been multiplied and additional resources of the parties and the court have been drawn upon.
4.

The Court finds that the failure of Plaintiffs’ counsel to file the signed, sworn

affidavit in the circumstances described in this Decision was done recklessly at a minimum, and

MEMORANDUM DECISION AND ORDER - 22

that such reckless conduct on the part of lawyers to this case, as officers of the court, justifies a
finding that the attorneys are personally liable for excessive costs associated with such conduct.
There is no question but that Plaintiffs’ counsel were aware of the signed, sworn affidavit.
Indeed, the record indicates that they were in repeated contact with Mr. Miller requesting him to
make the sworn statement, so that it could be submitted to the Court. Yet, after submitting an
unsworn declaration, and representing that a sworn statement could not be obtained because of
the witness’s fear of retaliation, they failed to file the actual sworn affidavit when it came into
their possession. Such conduct is reckless at a minimum. Therefore, the Court finds that an
award of sanctions against Plaintiffs’ counsel is also appropriate under 28 U.S.C. § 1297.
5.

The Court makes no finding as to whether sanctions are appropriate under FRCP

6.

Having determined that an award of sanctions against Plaintiffs’ counsel is

11.

justified under the inherent powers of the Court, Idaho Rule of Professional Conduct 3.3, and 28
U.S.C. § 1297, the Court orders as follows:
(A)

Plaintiffs’ counsel may not use the testimonial evidence of Michael Miller

in this case for any purpose, other than as obtained in deposition or courtroom testimony. The
Court has considered barring the use of Michael Miller’s testimony in any form, but concludes
that to do so would disproportionately affect the individual Plaintiffs for the failings of their
counsel. However, given the decisions and conduct of Plaintiffs’ counsel in regard to Mr.
Miller’s prior testimonial evidence, the Court will require that any evidence to be obtained or
otherwise used in this lawsuit may only be elicited in a deposition setting or courtroom
testimony, where the Defendants will have the full adversarial process available to them.
MEMORANDUM DECISION AND ORDER - 23

(B)

With respect to monetary sanctions imposed upon Plaintiffs’ counsel

individually (see infra), the undersigned hereby identifies attorneys Huntley, Conant, Sabalos,
and Flynn as being absolutely subject to this Memorandum Decision and Order. To the extent
any one of Plaintiffs’ remaining counsel believes that he should not be subject to this
Memorandum Decision and Order, he is to file a motion seeking relief from the same on or
before April 12, 2013, detailing the good cause for said relief. Defendants are permitted (but not
required) to file a response on or before April 19, 2013. Soon thereafter (in any event, before
Plaintiffs are to respond to any request by Defendants’ for recovery of fees and costs (see infra)),
the Court intends to issue a subsequent order setting out those additional attorneys who are (and
who are not, if any) subject to the sanctions set out in this Memorandum Decision and Order.
(C)

Subject to the terms of subparagraph 6(B), Plaintiffs’ counsel, jointly and

severally, shall pay a sum to each Defendant – Credit Suisse and C & W – to be determined upon
consideration of appropriate evidence, to recompense said Defendants for the attorneys’ fees and
costs necessitated by the motions filed seeking sanctions as a result of the failure to file the sworn
affidavit of Mr. Miller.6 If a Defendant seeks to recover such expenses, by April 19, 2013, it is to
seek recovery of such costs in the same manner as if the Defendant were seeking to recover costs

6

The Court considered a ruling that would allow for Defendants to seek recovery of any
attorneys’ fees and costs expended as a result of the fact of the failure to file the signed affidavit
of Mr. Miller, in the context of additional or different briefing and motion practice that would not
have been done but for the fact of the filing of the unsigned declaration and argument made upon
the same. Ultimately, the Court concluded that the difficult and time-consuming exercise of
trying to extract such threads from the much more extensive weave of the briefing and argument
that was submitted by Defendants would be extraordinarily difficult and not worth the price of
admission for the parties to pursue or defend, or for the Court to decide. Whether or not any
party will have an independent right to seek recovery of such fees and costs at a future date will
have to await the denouement of the lawsuit.
MEMORANDUM DECISION AND ORDER - 24

of suit, including attorney fees, as a matter of right under FRCP 54(d). Any such request shall
carry sufficient detail and explanation so as to allow the Court to find, by a preponderance of the
evidence submitted to it, that the requested costs are directly connected to the motion for
sanctions, and to the follow-up work in response to this ruling. If there is any doubt left by the
evidence in that regard, the Court will not award any costs represented by the doubtful evidence.
Plaintiffs shall have the right to respond and oppose the request for costs, if any is filed, in the
ordinary manner in response to an FRCP 54(d) motion.
(D)

Subject to the terms identified in subparagraph 6(B), Plaintiffs’ counsel

are each individually sanctioned in the sum of $6,000.00. The Court arrives at that sum by
considering the very serious nature of the decision not to file the sworn affidavit of Mr. Miller, or
to advise opposing counsel of the existence of that sworn affidavit, all as further previously
discussed in this Decision. Such failure unnecessarily multiplied the proceedings in this lawsuit,
caused an unnecessary and unjustifiable use of the resources of the parties and the Court,
constituted a material misrepresentation of the evidentiary record, and violated an attorney’s duty
of candor to the Court. Any sanction for those serious professional failings must serve both as
sanction for the fact of the improper conduct and as a deterrent to the lawyer, and other lawyers,
who might consider taking such actions in the future. As to the amount of the individual
sanction, the Court considers the following facts:
(1)

That each lawyer is established in his practice, and each lawyer

willingly came into the representation of the plaintiffs in this case (this is not a situation where a
lawyer has been appointed at the order of the Court to represent a particular party, nor are any of
the attorneys involved in this case on a pro bono basis);
MEMORANDUM DECISION AND ORDER - 25

(2)

That other than Mr. Huntley and Benjamin Schwartzman, each of

Plaintiffs’ counsel has come to the District of Idaho asking to be admitted to this Court on a pro
hac vice basis, in order to be one of the many counsel representing Plaintiffs in this case, and by
doing so, they have agreed to be governed by the same professional rules of conduct as apply to
lawyers admitted to the practice of this Court;7
(3)

That Plaintiffs’ counsel have represented to the Court in their

pleadings and filings in this case, that Plaintiffs’ claims carry millions of dollars of alleged
damages, involving transactions occurring at high-end resort properties in multiple geographic
locations, and with claims that conceivably could have been brought in courts other than the
District of Idaho;
(4)

That in order for a sanction to have a deterrent effect, it should

carry a significant enough economic impact upon the individual receiving the sanction so as to
cause that individual, and others who may learn of the sanction, to make decisions in the future
that are not likely to expose one to the possibility of receiving such a sanction;
(5)

That the Court considers a sanction which has the effect of

depriving an attorney of a week’s worth of earned fee income, as having a sufficient economic
deterrent effect to have the intended impact upon an attorney’s future decision-making about his
responsibilities as a licensed professional and as an officer of the Court.
(6)

That, assuming an average billing rate of $300 an hour for the

plaintiffs’ attorneys, which the Court believes is a conservative estimate, a 40 hour work week
will yield a gross earned income of $12,000.00.
7

The Court considered, but ultimately decided against, revoking the pro hac vice status
of those counsel who have been admitted to practice before this Court on that basis.
MEMORANDUM DECISION AND ORDER - 26

(7)

That, acknowledging that most attorneys do not earn a full billing

rate for every hour in a 40 hour rate, and acknowledging that not every attorney among those in
the list of Plaintiffs’ counsel has the same number of years of experience or reputation in
practice, which also can affect the gross income of an attorney;
(8)

That, after considering those factors described in paragraph

6(D)(7), the Court concludes that it is more appropriate to lessen the sanction as because it may
have a disproportionate impact upon certain of plaintiffs’ counsel in comparison to others, even
though to do so may lessen the deterrent effect upon those counsel of greater incomes;
(9)

That, therefore, the Court will reduce the $12,000 amount by one-

half, so as to make the sanction $6,000 for each of Plaintiffs’ counsel. In doing so, the Court
recognizes that for some of Plaintiffs’ counsel the amount may seem of small consequence;
however, the Court also points out that for those counsel, they also have the deterrent
consequence of knowing that any one of them could have stepped in to insist upon a different
decision in these circumstances, that could have protected not only themselves, but also their cocounsel who might be of lesser means, from the risk of the sanctions that the Court imposes in
this Order. Further, to the extent that there are disproportionate impacts upon the relative
economic resources of Plaintiffs’ counsel, they have the opportunity to equalize such impacts in
the context of satisfying their joint and several liabilities for any award of costs that the Court
may make in favor of the Defendants, as part of the follow-up to this decision.
(10)

As to attorneys Huntley, Conant, Sabalos, and Flynn, such

payments shall be made into the Registry of the Court on or before April 12, 2013. If, pursuant
to the subsequent order referenced in subparagraph 6(B), additional Plaintiffs’ attorneys are also
MEMORANDUM DECISION AND ORDER - 27

determined to be the proper subjects of this Memorandum Decision and Order, those attorneys
shall make their $6,000 payment to the Registry of the Court within 14 days of that subsequent
Order.
III. ORDER
For the foregoing reasons, IT IS HEREBY ORDERED that (1) Cushman & Wakefield’s
Motion for Sanctions (Docket No. 246) and (2) Credit Suisse’s Motion for Order to Show Cause
(Docket No. 253) are GRANTED. The analysis contained within this Memorandum Decision
and Order with respect to granting these motions, likewise operates as the support for denying
Plaintiffs’ Motion for Award of Attorneys’ Fees Re: Motions by Defendants (Docket No. 302).
Therefore, Plaintiffs’ Motion for Award of Attorneys’ Fees Re: Motions by Defendants (Docket
No. 302) is DENIED.
DATED: March 29, 2013

Honorable Ronald E. Bush
U. S. Magistrate Judge

MEMORANDUM DECISION AND ORDER - 28