Jalin Reality Capital Advisors, LLC v. A Better Wireless, NISP, LLC.
Filing
190
MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATIONS granting in part and denying in part 134 Defendant's Motion for Attorney Fees and Related Nontaxable Expenses filed by A Better Wireless, NISP, LLC. (Written Opinion) Signed by Chief Judge John R. Tunheim on 5/16/2018. (HAZ)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
JALIN REALTY CAPITAL ADVISORS,
LLC,
Civil No. 11-165 (JRT/LIB)
Plaintiff,
v.
HARTFORD CASUALTY INSURANCE
COMPANY, as assignee of A BETTER
WIRELESS, NISP, LLC,
MEMORANDUM
OPINION AND ORDER
ADOPTING REPORT AND
RECOMMENDATION
Defendant and
Counter Claimant,
v.
RHYTHM STONE MEDIA GROUP
LLC, d/b/a JALIN REALTY CAPITAL
ADVISORS,
Counter Defendant.
Ted A. Smith, BERGER KAHN, 300 Tamal Plaza Suite 215, Corte
Madera, CA 94925, for defendant/counter claimant.
Andrew Ndubisi Ucheomumu, LAW OFFICES OF ANDREW NDUBISI
UCHEOMUMU, 4938 Hampden Lane, Suite 133, Bethesda, MD 20814.
Seven years ago, Plaintiff Jalin Realty Capital Advisors, LLC (“Jalin”),
represented by counsel Andrew Ndubisi Ucheomumu, brought this trademark action
against A Better Wireless (“ABW”), which – after the Court dismissed all of Jalin’s
claims with prejudice – assigned its counterclaims to Defendant Hartford Casualty
Insurance Company (“Hartford”).
Now before the Court are Hartford’s motion for
attorney fees and Ucheomumu’s objections to the Magistrate Judge’s Report and
Recommendation (“R&R”) on that motion. Because those objections are as frivolous as
was Jalin’s underlying action, the Court will overrule them, adopt the R&R, and grant in
part and deny in part Jalin’s motion for attorney fees and related costs and expenses.
BACKGROUND
In 2011, Jalin sued ABW. 1 (Compl., Jan. 21, 2011, Docket No. 1.) In light of
egregious discovery violations, ABW moved for sanctions against Jalin and Ucheomumu,
a Maryland attorney who represented Jalin pro hac vice and certified its discovery
responses. (Mot. for Sanctions, Dec. 6, 2011, Docket No. 52.) The Magistrate Judge
granted that motion, barring Jalin from using any evidence other than what it had
disclosed in its first set of discovery responses – and levying monetary sanctions against
Ucheomumu personally because he alone had signed the discovery responses at issue and
had failed to provide notice that he would not be appearing at the hearing on the motion.
(Order on Sanctions at 11-13 & n.5, Feb. 22, 2012, Docket No. 60.)
In 2013, the Court dismissed all of Jalin’s claims against ABW with prejudice,
describing them as “variously unsupported, insufficiently pled, and entirely without
merit,” and criticized the conduct of counsel during discovery, specifically noting that the
Magistrate Judge’s “strong sanction” was appropriate. (Order on Summ. J. at 2-3, 5, 31,
1
Because the record is clear as to the underlying facts, (see Order on Summ. J. at 2-10,
31, Jan. 8, 2013, Docket No. 91), only those relevant to the matter at hand are discussed here.
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Jan. 8, 2013, Docket No. 91.) Ucheomumu moved to withdraw, and the Magistrate Judge
granted his motion but noted that withdrawal would not preclude a motion for attorney
fees against him. (Order on Mot. to Withdraw at 10-12, 14, Apr. 16, 2013, Docket No.
114.) ABW brought such a motion, (Mot. for Att’y Fees, Dec. 20, 2013, Docket No.
134), which the Court stayed pending ABW’s claim for reimbursement against its
insurer, Hartford, (Order on Stay, Jan. 29, 2014, Docket No. 139). Settlement of the
reimbursement claim led to Hartford’s substitution as Defendant and lifting of the stay.
(Order Adopting R&R, May 11, 2017, Docket No. 155.)
The Court referred the motion for attorney fees to United States Magistrate Judge
Leo I. Brisbois, who ordered briefing, held a hearing, and issued an R&R. (R&R at 1, 89, Feb. 9, 2018, Docket No. 186.) Hartford excluded local counsel from its request, and
now seeks $170,476.77 jointly and severally from Jalin pursuant to the Lanham Act and
from Ucheomumu pursuant to the Court’s inherent authority to issue sanctions. (Id. at 89, 23 n.11, 29 n.13.)
Neither Jalin (now unrepresented) nor Ucheomumu filed a
memorandum of opposition or attended the hearing. (Id. at 9.) Although Ucheomumu’s
law license is indefinitely suspended, he filed objections to the R&R. (Objs., Feb. 27,
2018, Docket No. 187.) Those objections are now before the Court.
DISCUSSION
I.
STANDARD OF REVIEW
Upon the filing of an R&R by a magistrate judge, “a party may serve and file
specific written objections to the proposed findings and recommendations.” Fed. R. Civ.
-3-
P. 72(b)(2); accord D. Minn. LR 72.2(b)(1). “The objections should specify the portions
of the magistrate judge’s [R&R] to which objections are made and provide a basis for
those objections.” Mayer v. Walvatne, No. 07-1958, 2008 WL 4527774, at *2 (D. Minn.
Sept. 28, 2008). “The district judge must determine de novo any part of the magistrate
judge’s disposition that has been properly objected to.” Fed. R. Civ. P. 72(b)(3); accord
D. Minn. LR 72.2(b)(3).
II.
WAIVER
“When a magistrate judge is hearing a matter pursuant to his or her limited
authority to make a recommended disposition, ‘a claimant must present all his claims
squarely to the magistrate judge, that is, the first adversarial forum, to preserve them for
review.’” Ridenour v. Boehringer Ingelheim Pharm., Inc., 679 F.3d 1062, 1067 (8th Cir.
2012) (quoting Madol v. Dan Nelson Auto. Grp., 372 F.3d 997, 1000 (8th Cir. 2004)).
Because Ucheomumu did not timely file briefing in opposition to Hartford’s motion or
appear at the motion hearing, his right to object to the Magistrate Judge’s recommended
disposition would ordinarily be waived. However, in part because of Ucheomumu’s
representation that he was unable to electronically file documents due to his suspended
law license, the Court will exercise its discretion to consider his objections.
III.
UCHEOMUMU’S OBJECTIONS
Ucheomumu raises seven objections. All fail.
First, Ucheomumu states that he was unable to open electronic notices of party
filings and asks for a copy of related party filings and an additional opportunity to
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respond to the motion for attorney fees. But Ucheomumu acknowledges that he was able
to intermittently open Court orders. The Court’s most recent Order anticipated this
litigation moving forward promptly. (Order at 4, Nov. 8, 2017, Docket No. 175.) The
day after it was issued, the Magistrate Judge entered a scheduling order naming
Ucheomumu as a party against whom fees were sought and requiring opposition to be
filed by December 14, 2017. (Scheduling Order, Nov. 9, 2017, Docket No. 177.) The
Court is already granting Ucheomumu considerable latitude by considering his objections
at all, and Ucheomumu does not deny that he received notice of and was able to open
court orders. Therefore, the Court will decline to modify the briefing schedule.
Second, Ucheomumu argues that it is unconstitutional to grant a fee award against
an out-of-state attorney but not against local counsel. Although Ucheomumu submits no
authority, he appears to imply that this result violates the dormant commerce clause. It
does not. This case does not involve state law, and the federal law at issue has been
neutrally applied. First, Hartford did not seek fees from local counsel because it does not
believe that local counsel behaved in bad faith. (R&R at 8-9; see also Resp. to Objs. at 34, Mar. 9, 2018, Docket No. 188.) Second, although the Magistrate Judge could have
recommended sanctions on his own initiative, it was not error for him to decline to do so.
Ucheomumu’s argument that local counsel was absent from the same hearings he failed
to attend is unavailing in light of the fact that various local counsel repeatedly endeavored
to withdraw from the case, (see Gilbert Notice of Withdrawal, July 18, 2011, Docket No.
36; Hastings Notice of Withdrawal, Mar. 5, 2012, Docket No. 61), at least one in part
because of Ucheomumu’s failure to communicate with her, (Order on Mot. to Withdraw
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at 12-14.) Moreover, Ucheomumu ignores the other independent justifications for the fee
award elaborated in the R&R. (R&R at 24-27.)
Third, Ucheomumu objects to the Magistrate Judge’s reliance on the disciplinary
findings of the Maryland Court of Appeals, arguing that the court did not make
independent findings in support of its disciplinary sanctions, but instead imposed
discipline “mostly based exclusively on the sanctions imposed” here. (Objs. at 3.) That
is blatantly false. The Maryland Court of Appeals quoted the hearing judge’s extensive
findings of fact and resolved Ucheomumu’s exceptions to them.
Att’y Grievance
Comm’n of Md. v. Ucheomumu, 150 A.3d 825, 830-34 (Md. 2016). Its conclusion was
that Ucheomumu “engaged in serious, wide-ranging misconduct, and violated numerous
[Maryland Lawyers’ Rules of Professional Conduct], two Maryland Rules [of
Professional Conduct], and one provision of the Code of Maryland.” Id. at 849 (citing in
particular his failure to maintain an attorney trust account and his conduct in this case).
Ucheomumu’s clumsy attempt at sleight of hand – pointing to a single page of
“additional information” included in the report of a 2014 Peer Review Panel to distract
from the unequivocal 2016 conclusions of the Court of Appeals – strongly suggests that
the discipline imposed thus far has not had the desired effect.
Fourth, Ucheomumu submits that the Magistrate Judge erred by relying on hearsay
statements made by Jalin’s principal, David Jackson, in the course of concluding that
Ucheomumu acted in bad faith throughout the course of this litigation. Ucheomumu is
wrong. First, the Court may take judicial notice of court transcripts because they are
public records. See Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007). Second, “the Federal
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Rules of Evidence do not necessarily apply in the context of a motion for sanctions,”
though “evidence relied on must, at a minimum, bear indicia of reliability.” Sentis Grp.,
Inc., Coral Grp., Inc. v. Shell Oil Co., 559 F.3d 888, 901 (8th Cir. 2009).
That
requirement is met here because the statements were explicit, first-hand, and made under
oath during Jackson’s criminal trial. Cf. id. at 900-01. Third and finally, the statements
would likely fall into the residual hearsay exception for the same reasons. Fed. R. Evid.
807. Thus, it was not error for the Magistrate Judge to use the statements for the limited
purpose of corroborating the Court’s prior findings of bad faith.
As part of this fourth objection, Ucheomumu also argues that he was not
responsible for Jalin’s discovery violations because he did not act in bad faith, but was
merely “a new attorney that was being taken advantage of by a criminal.” (Objs. at 3.)
Not only is that claim contradicted by Jackson’s testimony, but the Magistrate Judge has
already levied monetary sanctions against Ucheomumu personally in part due to the fact
that he – and only he – signed the discovery responses. (Order on Sanctions at 13 n.5).
Moreover, the Court explicitly found that Ucheomumu was “in large part” to blame for
the discovery violations.
(Order on Summ. J. at 3).
Little wonder:
the record
Ucheomumu submitted to oppose ABW’s motion for sanctions included, for instance, an
email to opposing counsel in which he described opposing counsel’s email about a meetand-confer as “a marvel in intellectual masturbation.” (Pl.’s Opp. to Mot. for Sanctions ¶
6, Ex. D, Dec. 23, 2011, Docket No. 54.) Ucheomumu may not shift blame for his own
conduct to Jalin. The Magistrate Judge did not err in enumerating the findings of bad
faith already in the record and concluding that they warrant a fee award against both Jalin
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and its counsel. See Aviva Sports, Inc. v. Fingerhut Direct Mktg., Inc., No. 09-1091,
2012 WL 12894846, at *10 (D. Minn. May 11, 2012) (finding that counsel’s “continued
pattern of hide-the-ball gamesmanship” regarding discovery warranted sanctions).
Fifth, Ucheomumu posits that Jalin’s ACPA claim cannot justify an award of
attorney fees because ACPA is not part of the Lanham Act. Set aside that this is wrong
as a matter of law, see, e.g., Faegre & Benson, LLP v. Purdy, 447 F. Supp. 2d 1008, 1011
(D. Minn. 2006) (discussing an attorney fee grant on an ACPA claim), that Jalin also
brought a frivolous Lanham Act trade dress claim that separately justifies a fee award,
and that all of Jalin’s claims are “inextricably intertwined,” (R&R at 15-18). What is
crucial is that Hartford only sought – and the Magistrate Judge only recommended – a
Lanham Act fee award against Jalin, not Ucheomumu. Because Ucheomumu is no
longer Jalin’s counsel and his law license is both out-of-state and currently suspended, an
objection on Jalin’s behalf would be an unauthorized practice of law.
Sixth, Ucheomumu argues that the law of the case doctrine applies to limit the rate
of ABW counsel Michael Lafeber to $230 per hour, the rate the Magistrate Judge used in
his previous sanctions grant. Ucheomumu incorrectly states that Lafeber gave the same
range of rates in the present litigation that he gave in the earlier sanctions litigation. In
fact, Lafeber earlier failed to provide an estimated rate for this case, merely stating that
he usually billed $520 per hour but was charging ABW less; as a result, the Magistrate
Judge assessed sanctions based on the rate that an associate at Lafeber’s firm was billing
on this case. (Order on Sanctions at 13.) Now, for the first time, Lafeber gave a range of
what he billed ABW: from $425 to $550 per hour. The Magistrate Judge considered that
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range, found it to be “reasonable for the Minnesota legal community,” and found that
$475 was a reasonable rate for calculating billing entries whose precise hourly rate was
not discernable from the records submitted. (R&R at 14-15.) He did not err in so doing,
and indeed Ucheomumu does not argue that $475 is an unreasonable fee.
Seventh, Ucheomumu argues that the primary litigation ended after ABW filed its
motion for summary judgment on May 30, 2012. At a minimum, it is inconceivable that
ABW’s reply brief and the hearing on that motion were not part of the primary litigation.
Moreover, the Court did not rule on ABW’s motion until January 8, 2013, and judgment
was not entered on Jalin’s claims until December 6, 2013. The Magistrate Judge ordered
supplementary briefing to discern how much time counsel spent defending Jalin’s claims
(as opposed to advancing ABW’s counterclaims) and set his award recommendation
accordingly, thus properly ensuring that the sanction as a whole was compensatory rather
than punitive. Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178, 1186-88 (2017).
All of this said, the Court is reluctantly willing to concede that Ucheomumu is not
quite as culpable as his client. See Ucheomumu, 150 A.3d at 838 (finding a lack of clear
and convincing evidence that Ucheomumu had advance knowledge of the fraud
perpetrated by Jalin and its principal, Jackson). The Court has already found that both
Jalin and Ucheomumu acted in bad faith from discovery onward, but it is less clear that
Jalin’s bad faith in bringing a vexatious Complaint may be personally attributed to its
counsel. Other than its frivolity, the only concrete evidence that the Complaint was
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brought in bad faith is Jackson’s subsequent conviction. 2 The Court is deeply skeptical
of Ucheomumu’s depiction of himself as a neophyte manipulated by a criminal he had
known for nearly two decades and knew had been previously convicted of fraud, id. at
830-31. But this skepticism alone is insufficient to warrant a finding of bad faith with
regard to the Complaint. And, although Jalin’s claims were “variously unsupported,
insufficiently pled, and entirely without merit,” (Order on Summ. J. at 2), Ucheomumu
had been a licensed attorney for less than two years at the time he filed them, see Liberty
Life Assur. Co. of Bos. v. Devillalvilla, No. 6:12-1320-37, 2014 WL 309084, at *5 (M.D.
Fla. Jan. 28, 2014) (“Wielding Hanlon’s razor, the Court declines to infer malice from
conduct that can be adequately attributed to incompetence.”). Thus, the Court will reduce
Ucheomumu’s liability for the fees and costs award by 10 percent to exclude the prediscovery category of litigation. See Goodyear, 137 S. Ct. at 1187.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, the
Court OVERRULES Ucheomumu’s Objections [Docket No. 187] and ADOPTS the
2
The Magistrate Judge rejected Hartford’s argument that Jackson’s trial statements prove
that Ucheomumu acted in bad faith by filing the Complaint because it wrongly identifies Jalin’s
principal as C. David Manns. (R&R at 27; see also Mem. Supp. Mot. for Att’y Fees at 36, Nov.
30, 2017, Docket No. 178.) According to Ucheomumu, Jackson told him that he had legally
changed his name to C. David Manns. Ucheomumu, 150 A.3d at 831. The earliest evidence that
Ucheomumu knew that Manns was a false name comes from an FBI agent who testified that he
told Ucheomumu as much on June 6, 2011. Id. at 832, 836. Jalin’s first local counsel initially
attempted to withdraw from the case one month later. (See Gilbert Notice of Withdrawal.) As
such, it is proper to conclude that Ucheomumu acted in bad faith from June or July 2011 onward.
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Report and Recommendation of the Magistrate Judge [Docket No. 186] to the extent
consistent with this Opinion. Accordingly, IT IS HEREBY ORDERED that:
1. Defendant’s Motion for Attorney Fees and Related Nontaxable Expenses
[Docket No. 134] is GRANTED in part and DENIED in part.
2. Defendant is awarded $135,522.60 in fees and $4,500 in costs, for a total of
$140,022.60. The entire award shall be recoverable from Jalin, and 90 percent
of the award ($126,020.34) shall be jointly and severally recoverable from
Jalin and Ucheomumu.
DATED: May 16, 2018
at Minneapolis, Minnesota.
_______
______
JOHN R. TUNHEIM
Chief Judge
United States District Court
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