MALIBU MEDIA, LLC v. DOE

Filing 245

ORDER denying 238 Motion for Reconsideration of Report and Recommendation. Signed by Magistrate Judge Mark J. Dinsmore on 6/9/2015. (CBU)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

MALIBU MEDIA, LLC,

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Plaintiff,
vs.
KELLEY TASHIRO,
N. CHARLES TASHIRO,
Defendants.

No. 1:13-cv-00205-WTL-MJD

ORDER ON PLAINTIFF’S MOTION FOR RECONSIDERATION
This matter comes before the Court on Plaintiff’s “Motion for Reconsideration of Report
and Recommendation.” [Dkt. 238.] For the reasons that follow, the Magistrate Judge DENIES
Plaintiff’s motion.
I.

Introduction

This order assumes that the reader is familiar with the facts giving rise to the previous
Report and Recommendation on Plaintiff’s Motion for Entitlement to Fees and Sanctions. [Dkt.
228.] In brief, attorney Jonathan Phillips (“Phillips”) undertook to simultaneously represent
Defendants Kelley and Charles Tashiro. Malibu Media (“Plaintiff”) filed a motion for sanctions
against Defendants in which it accused both Defendants of perjury and spoliation of evidence.
[Dkts. 130 & 159.] On November 11, 2014, the Court set Plaintiff’s motion for an evidentiary
hearing to be held on January 22, 2015. [Dkt. 165.]
The morning of the hearing, attorney Phillips advised the Court that he had just learned
that Defendant Charles Tashiro planned to invoke his Fifth Amendment right to avoid testifying
in a way that could incriminate himself. [Dkt. 206.] Phillips concluded that this created a conflict
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of interest between his clients, and Phillips committed to withdraw his appearance for Charles.
[Id.] The Court then continued the hearing to allow Mr. Tashiro to seek new counsel. [Id.]
Following the continuance, Plaintiff filed its “Motion for Entitlement to Fees and
Sanctions.” [Dkt. 211.] Plaintiff sought to hold Defendant Charles and attorney Phillips liable for
the fees and costs associated with preparing for the aborted evidentiary hearing, but the
undersigned Magistrate Judge recommended that the Court deny Plaintiff’s motion. [Dkt. 228.]
Instead of objecting to the Report and Recommendation, Plaintiff filed the currently pending
Motion for Reconsideration. [Dkt. 238.] Plaintiff’s motion focuses on whether Phillips failed to
satisfy Indiana Rule of Professional Conduct 1.7(b) in such a way that he “unreasonably and
vexatiously” multiplied the proceedings within the meaning of 28 U.S.C. § 1927. The Magistrate
Judge therefore will not address any other aspects of the prior Report and Recommendation. See,
e.g., Ripberger v. Corizon, Inc., 773 F.3d 871, 879 (7th Cir. 2014) (undeveloped arguments are
waived).
II.

Discussion

“Motions for reconsideration serve a limited function: to correct manifest errors of law or
fact or to present newly discovered evidence.” Caisse Nationale de Credit Agricole v. CBI
Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996). Plaintiff has not put forward any new evidence
with its motion, and Plaintiff must thus be arguing that the undersigned’s prior recommendation
constituted a “manifest error[] of law or fact.” This is a difficult standard to meet: “Motions to
reconsider are granted for ‘compelling reasons,’ such as a change in the law which reveals that
an earlier ruling was erroneous, not for addressing arguments that a party should have raised
earlier.” Solis v. Current Dev. Corp., 557 F.3d 772, 780 (7th Cir. 2009) (citation omitted). It is
accordingly “inappropriate to argue matters that could have been raised in prior motions” or to

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“rehash previously rejected arguments[.]” United States v. Zabka, No. 1:10-CV-1078, 2013 WL
9564253, at *2 (C.D. Ill. Aug. 19, 2013); accord, e.g., Caisse Nationale, 90 F.3d at 1270 (“Again
we emphasize, apart from manifest errors of law, reconsideration is not for rehashing previously
rejected arguments.”); id. (“[A] motion to reconsider is not the appropriate vehicle to introduce
new legal theories[.]”). This Court ultimately has “broad discretion” in deciding whether to grant
a motion for reconsideration, Solis, 557 F.3d at 780, and for the reasons that follow, the
Magistrate Judge exercises that discretion to deny Plaintiff’s motion.
A. Indiana Rule of Professional Conduct 1.7
The previous Report and Recommendation explained that, until the morning of the
originally scheduled evidentiary hearing, attorney Phillips had a reasonable belief that he could
represent both Charles and Kelley Tashiro. [Dkt. 228 at 10-11.] In so finding, the undersigned
Magistrate Judge determined that Phillips reasonably believed he was in compliance with
Indiana’s ethical rules governing concurrent conflicts of interest. The relevant rule provides as
follows:
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the
representation involves a concurrent conflict of interest. A concurrent conflict of
interest exists if:
(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be
materially limited by the lawyer’s responsibilities to another client, a former client
or a third person or by a personal interest of the lawyer.
(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a
lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent
and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against
another client represented by the lawyer in the same litigation or other proceeding
before a tribunal; and
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(4) each affected client gives informed consent, confirmed in writing.
Ind. Rules of Prof’l Conduct R. 1.7. Plaintiff now attacks the determination that Phillips
reasonably believed he was in compliance with this rule.
1. Rule 1.7(b)(1)
Plaintiff argues that the previous Report and Recommendation “conflated [attorney
Phillips’] subjective surprise” that Charles would invoke his Fifth Amendment rights “with the
obligation to avoid being surprised in the first instance.” [Dkt. 238 at 1.] Plaintiff maintains that
a reasonable attorney would have “timely investigated his conflict of interest and advised
Charles of his Fifth Amendment rights” well in advance of the hearing, [id. at 7], such that
Phillips could not have “reasonably believe[d],” Ind. Rules of Prof’l Conduct R. 1.7(b)(1), that
he would be able to provide representation to both of the Tashiros.
This argument simply rehashes an argument raised in Plaintiff’s original motion for
sanctions. [See Dkt. 211 at 7 (“As is readily apparent, however, Charles’s right against selfincrimination and Phillips’s obvious potential conflict of interest were known (and affirmatively
brought to Phillips’s attention) months in advance of the sanctions hearing. Phillips should have
advised Charles of his Fifth Amendment rights and requested to withdraw from representation
based on his readily apparent conflict of interest by July 15, 2014[.]”).] As such, this argument is
not an appropriate basis on which to grant Plaintiff’s motion for reconsideration. See Caisse
Nationale, 90 F.3d at 1270 (“[R]econsideration is not for rehashing previously rejected
arguments.”).
Plaintiff nonetheless adds to its argument with a discussion of the “financial interestliberty interest dichotomy.” [Dkt. 238 at 2-3.] Plaintiff concedes that in the early stages of this
litigation, it “may [have been] reasonable to assume a waivable conflict existe[d]” between

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Charles and Kelley because the Tashiros’ financial interests were aligned. [Id. at 3.] After
Plaintiff accused Charles and Kelley of perjury, however, Plaintiff maintains that the Tashiros’
“liberty” interests were put at risk: perjury, the argument goes, is a crime, and so Plaintiff’s
motion for sanctions threatened both Tashiros with jail time. [Id.] This, in turn, allegedly caused
the Tashiros’ interests to diverge in such a way that Phillips could no longer reasonably believe
that he could represent them. [Id.]
As an initial matter, Plaintiff has offered no explanation for why this discussion of the
“financial interest-liberty interest dichotomy” was raised for the first time in its motion for
reconsideration. As a result, this argument is not an appropriate basis for a motion for
reconsideration. See Caisse Nationale, 90 F.3d at 1270 (“[A] motion to reconsider is not the
appropriate vehicle to introduce new legal theories[.]”); see also Jolly Grp., Ltd. v. Medline
Indus., Inc., 435 F.3d 717, 720 (7th Cir. 2006) (internal quotation marks and alteration omitted)
(“The district court correctly observed that motions for reconsideration do not provide a vehicle
for a party to introduce new evidence or legal theories that could have been presented earlier.”).
More to the point, Plaintiff’s argument lacks merit. Although Plaintiff notes that a court
may “refer a civil litigant to the U.S. Attorney’s office for criminal prosecution based on
perjury,” [Dkt. 238 at 3 n.1], such a referral has not occurred in this case, and the Court has no
plans to make such a referral. It is thus speculative and unwarranted for Plaintiff to treat the
Tashiros as if they are or were criminal defendants facing jail time. This case remains a civil
matter, and the Magistrate Judge thus agrees with Plaintiff that it was reasonable to assume that
any conflict between the Tashiros was waivable. [See Dkt. 238 at 3.]
The fact that this is a civil matter also reduces the force of Plaintiff’s argument that
Phillips should have more carefully investigated any potential conflict. Plaintiff relies on a

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footnote from Holloway v. Arkansas: “The potential for conflict of interest in representing
multiple defendants is so grave that ordinarily a lawyer should decline to act for more than one
of several co-defendants except in unusual situations when, after careful investigation, it is clear
that no conflict is likely to develop and when the [co]-defendants give an informed consent.”
[Dkt. 238 at 7 (emphasis and alteration added by Plaintiff) (quoting Holloway v. Arkansas, 435
U.S. 475, 486 n.8 (1978)).] Based on this passage, Plaintiff maintains that Phillips did not
conduct a sufficiently “careful investigation” of his conflict between the time Plaintiff moved for
sanctions and the time of the evidentiary hearing, such that Phillips abdicated his responsibility
to act as a reasonable attorney. [See id.]
Holloway, however, dealt with conflicts in criminal cases. See 435 U.S. at 485 (internal
quotation marks omitted) (“An attorney representing two defendants in a criminal matter is in the
best position professionally and ethically to determine when a conflict of interest exists or will
probably develop in the course of a trial.”). And indeed, the very footnote on which Plaintiff
relies was a quotation from the “American Bar Association in its Standards Relating to the
Administration of Criminal Justice.” Id. at 486 n.8 (emphasis added). Thus, even if Holloway
suggests that an especially careful investigation of conflicts is required in the criminal context,
the case has little relevance to the civil matter currently before the Court. Accord, e.g., Ind. Rules
of Prof’l Conduct R. 1.7 cmt. 23 (“The potential for conflict of interest in representing multiple
defendants in a criminal case is so grave that ordinarily a lawyer should decline to represent
more than one codefendant. On the other hand, common representation of persons having similar
interests in civil litigation is proper if the requirements of paragraph (b) are met.”).
Finally, the Magistrate Judge remains unconvinced that Phillips failed to reasonably
investigate his clients’ positions. The prior Report and Recommendation already explained that

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the Tashiros maintained consistent positions throughout this litigation. [Dkt. 228 at 6 (“[T]his
case involved no ‘incompatibility in positions’ because both Defendants consistently maintained
that no infringement occurred[.]”); id. at 8 (“Plaintiff’s arguments about the alleged discovery
violations overlook the fact that Defendants never actually adopted inconsistent positions.”); id.
at 9 (“[T]he Defendants had legitimate and consistent explanations for their alleged
misconduct.).”] The Tashiros’ positions at all times up to the evidentiary hearing were thus
consistently aligned, and the Magistrate Judge cannot say that it was sanctionably unreasonable
for Phillips to continue representing both clients. Accord, e.g., Van Kirk v. Miller, 869 N.E.2d
534, 541 (Ind. Ct. App. 2007) (quoting Ind. Rules of Prof’l Conduct R. 1.7 cmt. 28) (“[C]ommon
representation is permissible where the clients are generally aligned in interest even though there
is some difference in interest among them.”).
2. Rule 1.7(b)(2)
The Indiana Rules of Professional Conduct provide that joint representation is not
permissible if the representation is “prohibited by law.” Ind. Rules of Prof’l Conduct R.
1.7(b)(2). Plaintiff argues that this aspect of Rule 1.7 precluded attorney Phillips from
representing both Tashiros, such that it was unreasonable for Phillips not to withdraw as the
attorney for Charles Tashiro at an earlier time. [Dkt 238 at 10-11.]
Again, Plaintiff has offered no reason why it did not raise this issue in its initial motion
for sanctions. In that motion, Plaintiff cited Rule 1.7 multiple times, [Dkt. 211 at 20, 22], and
Plaintiff quoted at length from the Rule and its comments. [Dkt. 211 at 20 n.11.] Plaintiff was
thus obviously aware of the requirements of Rule 1.7(b), and Plaintiff’s failure to raise this issue
at an earlier time makes this argument an improper basis on which to grant Plaintiff’s motion for

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reconsideration. See Zabka, 2013 WL 9564253, at *2 (“It is inappropriate to argue matters that
could have been raised in prior motions[.]”).
The 1.7(b)(2) argument also fails on the merits. Plaintiff cites a string of cases that
allegedly support its contention that “[t]he joint representation of two co-defendants accused of
conspiring to obstruct justice through perjury . . . is prohibited,” [Dkt. 238 at 10-11], but these
cases are unpersuasive. At the outset, these cases deal primarily with conflicts in the criminal
context, see, e.g., United States v. Algee, 309 F.3d 1011, 1013 (7th Cir. 2002) (addressing “a
criminal defendant’s right to his chosen attorney”), whereas this case—as explained above—
remains a civil matter. Hence, even if a more stringent prohibition on conflicts of interest is
required to protect a criminal defendant’s liberty interests than is necessary to protect a civil
defendant’s property interests, [see Dkt. 238 at 2-3], this more stringent standard is not relevant
to this case.
Moreover, even if the Tashiros were facing criminal charges, the cases Plaintiff cites do
not establish a per se rule that would prohibit an attorney from jointly representing them. These
cases instead recognize that, when a criminal co-defendant seeks to waive his right to an unconflicted attorney, the district court has “substantial latitude” in deciding whether the proposed
joint representation is permissible. See id.; see also Wheat v. United States, 486 U.S. 153, 163
(1988). The law therefore does not recognize Plaintiff’s alleged per se rule against joint
representation. Accord, e.g., Hanna v. State, 714 N.E.2d 1162, 1166 (Ind. Ct. App. 1999) (citing
Holloway, 435 U.S. 475, 482–83) (“Requiring or permitting a single attorney to represent codefendants, often referred to as joint representation, is not per se violative of constitutional
guarantees of effective assistance of counsel. We have further recognized that a defendant may
waive his right to be represented by counsel who is unencumbered by conflicting interests.”); see

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also id. (quoting Holloway, 435 U.S. at 482-83) (“[M]ultiple defendants can appropriately be
represented by one attorney; indeed, in some cases, certain advantages might accrue from joint
representation. . . . ‘Joint representation is a means of insuring against reciprocal recrimination.
A common defense often gives strength against a common attack.’”). Based on the this analysis,
Phillips’ representation was not “prohibited by law,” and the undersigned accordingly concludes
that Phillips did not ignore the requirements of Rule 1.7(b)(2).
3. Rule 1.7(b)(3)
Indiana provides that a conflict may be waived only if “the representation does not
involve the assertion of a claim by one client against another client represented by the lawyer in
the same litigation or other proceeding before a tribunal.” Ind. Rules of Prof’l Conduct R.
1.7(b)(3). Plaintiff contends that this rule prohibited Phillips’ joint representation because
“Kelley would likely blame Charles for his obstructions,” such that Kelley would essentially be
“assert[ing] a claim” against Charles. [Dkt. 238 at 12.]
Once more, Plaintiff offers no explanation for its belated decision to raise this argument
at this time, and its failure to do so is reason enough to deny the motion for reconsideration. See
Zabka, 2013 WL 9564253, at *2. Plaintiff also misconstrues the meaning of Rule 1.7(b)(3).
“Paragraph (b)(3) prohibits representation of opposing parties in the same litigation, regardless
of the clients’ consent. On the other hand, simultaneous representation of parties whose interests
in litigation may conflict, such as coplaintiffs or codefendants, is governed by paragraph
(a)(2).” Ind. Rules of Prof’l Conduct R. 1.7 cmt. 23. Rule 1.7(b)(3) is thus inapplicable to
codefendants such as the Tashiros. Instead, the Court must look to Rule 1.7(a)(2), which states
that a conflict arises if “there is a significant risk that the representation of one or more clients
will be materially limited by the lawyer’s responsibilities to another client[.]” Id. 1.7(a)(2). As

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explained above, and as explained more fully in the prior Report and Recommendation, the
Tashiros’ case either 1) did not present such a “significant risk” or 2) presented only a risk to
which the affected parties could consent. [See Dkt. 228 at 6-9.] Phillips thus did not violate Rule
1.7.
The case law Plaintiff cites does not change this analysis. Plaintiff first notes that the
Seventh Circuit has observed that “[a] conflict of interest is present whenever one defendant
stands to gain significantly by counsel adducing probative evidence or advancing plausible
arguments that are damaging to the cause of a codefendant whom counsel is also representing.”
U.S. ex rel. Gray v. Dir., Dep’t of Corr., State of Ill., 721 F.2d 586, 596-97 (7th Cir. 1983)
(quoting Foxworth v. Wainwright, 516 F.2d 1072, 1076 (5th Cir.1975)). The court in Gray,
however, said nothing about whether such a conflict may be waived, see id., and in fact, the case
that Gray quoted, Foxworth, expressly recognized that “[j]oint representation . . . does not
inherently deprive a defendant of the effective assistance of counsel.” 516 F.2d at 1076. Gray
might therefore support Plaintiff’s contention that Phillips’ clients had a conflict of interest, but
the case does not support Plaintiff’s contention that Phillips could “under no circumstances”
continue representing them. [Dkt. 238 at 11.] To the contrary, as long as Phillips complied with
Rule 1.7—and as explained in this order, Phillips did—then Phillips’ representation was
appropriate. See Ind. Rules of Prof’l Conduct R. 1.7(b) (explaining the situations in which a
lawyer may “represent a client” regardless of “the existence of a concurrent conflict of interest”).
Plaintiff then cites Van Kirk v. Miller, 869 N.E.2d 534, 542 (Ind. Ct. App. 2007). [Dkt.
238 at 12.] There, the Indiana Court of Appeals acknowledged that some conflicts are not
consentable, but the court went on to find that the conflict at issue was consentable because the
affected clients “had a common goal” and because their interests were “generally aligned.” 869

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N.E.2d 534 at 542 (quoting Ind. Rules of Prof’l Conduct R. 1.7 cmt. 28). Here, Plaintiff itself
acknowledges that the Tashiros’ financial interests were “generally aligned,” [see Dkt. 238 at 23], and the longstanding consistency between the Tashiros’ legal positions confirms that they had
both a common goal and aligned interests in defending this case. If anything, then, Van Kirk
supports the conclusion that Phillips’ representation was not unreasonable.
4. Rule 1.7(b)(4)
Indiana finally requires that a lawyer who seeks to represent conflicted clients must
obtain each client’s “informed consent, confirmed in writing.” Ind. Rules of Prof’l Conduct R.
1.7(b)(4). Plaintiff asserts that “there is no record evidence to suggest Defense Counsel obtained
written consent from Charles or Kelley,” [Dkt. 238], but it is Plaintiff’s burden to show that the
imposition of sanctions is warranted. See, e.g., Vandeventer v. Wabash Nat. Corp., 893 F. Supp.
827, 842 (N.D. Ind. 1995). If Plaintiff believes that Phillips proceeded unreasonably because
Phillips failed to obtain written consent from his clients, then Plaintiff must put forth evidence to
support its claim. Plaintiff has not done so, and this argument thus presents no reason to
reconsider the prior Report and Recommendation.
5. Case Law
In addition to Rule 1.7(b), Plaintiff supports its motion for reconsideration with Matter of
Maurice, 69 F.3d 830 (7th Cir. 1995), and U.S. v. Associated Convalescent Enters., Inc., 600 F.
Supp. 18 (C.D. Cal. 1984). [See Dkt. 238 at 8-9; see also Dkt. 244 at 7 (“[Phillips] fails to
address the vast majority of Plaintiff’s case law, including Matter of Maurice, 69 F.3d 830 (7th
Cir. 1995) and U.S. v. Associated Convalescent Enters., Inc., 600 F. Supp. 18 (C.D. Cal. 1984),
cases in which attorneys were sanctioned under 28 U.S.C. § 1927 for conduct identical to
Phillips’s under even less egregious circumstances.”).] As an initial matter, these cases are the

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same cases on which Plaintiff relied in its original motion for sanctions, and Plaintiff has in fact
quoted many of the same sentences in both its original motion and the current motion for
reconsideration. [Compare Dkt. 211 at 23-24, with Dkt. 238 at 8-9.] Once again, then, Plaintiff is
merely rehashing the same arguments that were previously rejected, in apparent ignorance of the
Seventh Circuit’s admonition that it is not appropriate to do so. See Caisse Nationale, 90 F.3d at
1270 (7th Cir. 1996) (“Again we emphasize, apart from manifest errors of law, reconsideration is
not for rehashing previously rejected arguments.”). 1
In any event, the cases on which Plaintiff relies do not establish that sanctions are
warranted. In Matter of Maurice, the district court sanctioned attorney Kenneth Kozel because
Kozel filed and then continued to pursue an appeal of his client’s claims without his client’s
authorization. 69 F.3d at 833. The Seventh Circuit upheld the imposition of sanctions and quoted
the district court in noting that “Kozel had a duty to communicate with his client and abide by his
decision not to pursue an appeal. The right to appeal in this case was Maurice’s, not Kozel’s,
regardless of how justified Kozel thinks it is.” Id. The court also observed that Kozel failed to
return his client’s telephone calls and failed to answer his client’s letters, with the end result that
the appeal contravened the express wishes of Kozel’s client. Id. at 832-33.
The current case presents no such flagrant misconduct. Presumably, Plaintiff cites the
case for the proposition that Phillips breached his own “duty to communicate with his client” by
failing to specifically explain to Defendant Charles at an earlier date that Charles might wish to
invoke his Fifth Amendment rights. Even if Phillips did breach this duty, however, Phillips did
not compound this breach by ignoring the express wishes of his client: Phillips’ conduct, that is,
would have been comparable to Kozel’s only if Phillips had both failed to advise Charles about

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It is also ironic that Plaintiff seeks sanctions for conduct that allegedly “multiplie[d] the proceedings,” 28 U.S.C. §
1927, when it is Plaintiff that has now chosen to rehash the same arguments and the same issues in multiple motions.

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his Fifth Amendment rights and had then ignored Charles’ wishes once Charles was later
informed about those rights. Nothing indicates that Phillips engaged in this latter misconduct,
and so the Magistrate Judge does not find that Phillips’ conduct is so similar to Kozel’s that
sanctions are warranted on the basis of Matter of Maurice.
United States v. Associated Convalescent Enterprises, Inc. is also distinguishable. There,
the government named Mr. Leo Branton, Jr., as a potential witness. 600 F. Supp. at 18. Six
weeks before trial, however, Mr. Branton entered an appearance on behalf of the defendant. Id.
This created a potential conflict, see, e.g., Model Rules of Prof’l Conduct R. 3.7 (“A lawyer shall
not act as advocate at a trial in which the lawyer is likely to be a necessary witness [.]”), but Mr.
Branton did not inform the court about the conflict until four days before the trial was to begin.
Id. The court then postponed the trial and sanctioned Mr. Branton. Id. at 20. The court found “no
merit in Mr. Branton’s claim that he was wholly unaware of any potential conflict,” and it wrote
that Mr. Branton “had a duty at the time that he requested to be allowed to enter [the] case to
inform the Court of the existence and nature of his potential conflict so that his requested
substitution could properly be evaluated.” Id. The court also observed that if Mr. Branton “had
been candid and forthcoming with the Court,” then the continuance could have been avoided. Id.
The current case is distinguishable in two respects. First, the Magistrate Judge has
already described that attorney Phillips had a reasonable belief that he could represent the
Tashiros because their positions had been consistent throughout the litigation. Based on this
finding, the Magistrate Judge concludes that—unlike Mr. Branton—Mr. Phillips was unaware
that a conflict would necessitate his withdrawal. Second, it is unclear that any additional
“candor” or openness about any potential conflict would have prevented the continuation of the
original evidentiary hearing. Admittedly, Phillips could have advised Charles at an earlier time

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that Charles could assert his Fifth Amendment rights, but it had always been Defendants’
position that no infringement or discovery misconduct occurred. [See Dkt. 228 at 9 (“Defendants
had legitimate and consistent explanations for their alleged misconduct.”).] In light of these
innocent explanations for their alleged wrongdoing, Defendants would have had no reason to
invoke their Fifth Amendment rights, and so even if Phillips had “been candid and forthcoming
with the Court” when he decided to begin jointly representing the Tashiros, it is unlikely that the
Fifth Amendment issue would have been raised. Thus, even if the Court accepted the proposition
that Phillips should have communicated more openly with the Court, it is unlikely that such
additional communication would have changed the course of this litigation.
Finally, even if the facts of the above-cited cases were closer to the facts of the case
currently at hand, this Court would not be bound to sanction Phillips. Sanctions under 28 U.S.C.
§ 1927 are not mandatory, see, e.g., Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990,
1014 (7th Cir. 2004) (“Section 1927 is permissive, not mandatory. The court is not obliged to
grant sanctions once it has found unreasonable and vexatious conduct.”), and the trial court has
significant discretion in deciding whether to impose such sanctions. See, e.g., Kapco Mfg. Co. v.
C & O Enterprises, Inc., 886 F.2d 1485, 1491 (7th Cir. 1989) (citations omitted) (“The review of
an order imposing sanctions under section 1927 is a deferential one, subject to the abuse of
discretion standard. This court need only inquire whether any reasonable person could agree with
the district court's sanction award.”). Here, an exercise of that discretion is warranted. Phillips
reasonably believed that his clients had asserted and would continue to assert consistent positions
that would allow him to represent both clients. And Phillips reasonably believed that his clients
had legitimate explanations for their conduct, such that invoking the Fifth Amendment would not
be necessary. These beliefs ultimately proved to be erroneous, but the Magistrate Judge does not

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find that Phillips’ conduct was so unjustified that sanctions are warranted. The motion to
reconsider is DENIED.
III.

Conclusion

For the reasons set forth above, the Magistrate Judge DENIES Plaintiff’s “Motion for
Reconsideration of Report and Recommendation.” [Dkt. 238.]

Date: 06/09/2015

Distribution:
Jonathan LA Phillips
[e-mail]
Jason H. Cooper
LIPSCOMB, EISENBERG & BAKER, PL
[e-mail]
Michael K. Lipscomb
LIPSCOMB, EISENBERG & BAKER, PL
[e-mail]
Paul J. Nicoletti
NICOLETTI LAW, PLC
[e-mail]
Jonathan LA Phillips
SHAY KEPPLE PHILLIPS, LTD
[e-mail]
Erin Kathryn Russell
THE RUSSELL FIRM
[e-mail]

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