HOME REVOLUTION, LLC et al v. JERRICK MEDIA HOLDINGS, INC. et al
OPINION. Signed by Judge John Michael Vazquez on 2/17/2021. (lag, )
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Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HOME REVOLUTION, LLC, et al.,
Civil Action No. 20-cv-07775
JERRICK MEDIA HOLDINGS, INC., et al.
John Michael Vazquez, U.S.D.J.
This matter comes before the Court by way of Defendants’ motion to vacate the Clerk of
the Court’s entry of default and for sanctions, see D.E. 45, and Plaintiffs’ cross-motion for the
deposit of funds pursuant to Fed. R. Civ. P. 67 and for sanctions, D.E. 48. The Court reviewed the
parties’ submissions in support and in opposition and decided the motion without oral argument
pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the reasons stated below, Defendants’
motion is granted in part and denied in part and Plaintiffs’ cross-motion is denied.
Plaintiffs filed their initial Complaint on June 25, 2020. D.E. 1. Plaintiffs then moved, by
order to show cause, for “the appointment of a Receiver/Trustee to manage the affairs and business
of Defendant Jerrick Media Holdings, Inc.” (“Jerrick”). D.E. 10. The Court denied that motion
on August 13, 2020. D.E. 23. Defendants then moved to dismiss Plaintiffs’ Complaint on August
14, 2020. See D.E. 24, D.E. 25, D.E. 26, D.E. 27, D.E. 28. The same day, Plaintiffs filed their
First Amended Complaint, D.E. 29 (“FAC”). The pending motions arise from Defendants’ attempt
to secure an extension to respond to Plaintiffs’ FAC.
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Defendants contend that “Plaintiffs’ counsel agreed to a two-week extension of time for
Defendants to submit a Motion to Dismiss the Amended Complaint.” D.E. 44 ¶ 20. The email
chain annexed as Exhibit A to the Declaration of Chelsea Pullano shows that Defendants’ counsel
requested an extension to respond to Plaintiffs’ FAC until September 18, 2020. D.E. 44-1 at 4. In
relevant part, Plaintiffs’ counsel responded that “September 18 is too long. I can agree to
September 1.” Id. at 3. Defendants’ counsel replied “I’ll need until September 18th. You actually
can’t agree to September 1st because no response from me would be due until later than that in any
event.” Id. at 2. Plaintiffs’ counsel responded “[y]ou need another 30 days to update your motion?
I added 6 paragraphs.” Id. Defendants’ counsel responded “[n]o you appear to be mistaken. A
response would normally be due on Sept. 4th, unless it is me who is mistaken. What I’m asking
for, then, is two weeks.” Id. at 1. Plaintiffs’ counsel replied “k.” Id. Defendants contend this
exchange resulted in an agreement to extend Defendants’ time to respond to the FAC until
September 18, 2020. D.E. 45 at 3.
However, on August 28, 2020, Plaintiffs’ counsel filed a letter indicating that he “tried to
set up a new briefing schedule for the amended motion to dismiss” but that “Defendants’ counsel
sought to take as much time as possible, without really any explanation.” D.E. 30. Plaintiffs’
counsel continued that “the pending motion to dismiss is mooted by the amended complaint and
that there is no agreement on a briefing schedule.” Id. Plaintiffs’ counsel then warned that he
would “move for default if a proper responsive pleading is not timely filed.” Id. Chief United
States Magistrate Judge Falk held a teleconference on September 2, 2020. D.E. 31. After the
teleconference, Judge Falk entered an order scheduling a case management conference for October
27, 2020 “to address all outstanding issues.” D.E. 32.
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On September 11, 2020, Plaintiffs filed a request for entry of default as to Defendants “for
failure to plead or otherwise defend” the FAC. D.E. 33. Along with the request for default,
Plaintiffs’ counsel submitted an executed declaration stating, in relevant part, that “Defendants
have not requested or been granted an extension of time to answer or otherwise respond to the
Amended Complaint.” D.E. 33-1 at 2, ¶ 6. The Clerk of the Court entered default against
Defendants the same day. On September 14, 2020, Defendants’ counsel filed a letter “requesting
guidance” on how to address the entry of default. D.E. 34. at 1. 1 Defendants’ letter concluded by
requesting an order from Judge Falk:
(i) removing the clerk’s default, and sanctioning Plaintiffs’ and their
counsel for lying to the clerk in order to obtain it; (ii) setting a
deadline for Defendants’ motion to dismiss the Amended
Complaint; (iii) permitting Defendants to deposit $660,000 with the
Court pursuant to Rule 67; (iv) clarifying what matters are to wait
until the Zoom hearing on October 27, 2020, and (v) for all other
and further relief in the wisdom and discretion of the Court.
Id. at 3. Plaintiffs’ counsel responded with a letter explaining the basis for the request for default.
D.E. 35. Plaintiffs’ counsel concluded by stating “[l]et [Defendants’ counsel] demonstrate an
AGREEMENT on the timing, and I will withdraw this application today. Otherwise, ask yourself
who is misleading this Court.” Id. (capitalization in original).
Plaintiffs’ counsel represents to the Court and declares under oath that Defendants’ counsel
alleged the Clerk’s entry of default was improper “for the first time” in response to Plaintiffs’
counsel’s email of December 9, 2020. D.E. 48-2 at 6, ¶¶ 19-21; D.E. 48-1 at 22-23 (“Plaintiffs’
counsel wrote to [Defendants’ counsel] again, on December 9, 2020 . . . [Defendants’ counsel]
responded the next day, and, for the first time, alleged the default was entered improperly.”
(emphasis added (citing Weisbrot Decl. ¶ 20)). Plaintiffs’ counsel’s representations and testimony
are not accurate. As discussed, defense counsel filed a letter on the docket on September 14, 2020
challenging the validity of the default and, among other things, requesting the Court to remove
“the clerk’s default.” D.E. 34 at 3. Plaintiffs’ counsel clearly received this letter because he filed
a response the same day. D.E. 35.
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The parties’ disputes as to the entry of default were not resolved during the compliance
conference with Judge Falk, which was held on December 12, 2020. D.E. 42. Defendants’ motion
to vacate the Clerk’s entry of default and for sanctions followed. D.E. 43, D.E. 44, D.E. 45, D.E.
46. In response, Plaintiffs filed a cross-motion for sanctions and for the deposit of funds pursuant
to Fed. R. Civ. P. 67. D.E. 48. Defendants filed a reply in further support of their motion to vacate,
D.E. 49, and opposed Plaintiffs’ cross-motion, D.E. 51. Plaintiffs filed a reply brief in further
support of their cross-motion. D.E. 52.
A. Defendants’ Motion to Vacate the Clerk’s Entry of Default
Defendants move to set aside the Clerk’s entry of default. 2 D.E. 43. “The court may set
aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b).”
Fed. R. Civ. P. 55(c); 60(b) (listing “grounds for relief from a final judgment” as “(1) mistake,
inadvertence, surprise, or excusable neglect”). The decision to set aside an entry of default is left
to the district court’s sound discretion. United States v. $55,518.05 in U.S. Currency, 728 F.2d
192, 194 (3d Cir. 1984). Courts generally disfavor default, preferring decisions on the merits.
Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir. 1982). Courts are required to consider the
following four factors when deciding to vacate an entry of default: “(1) whether lifting the default
would prejudice the plaintiff; (2) whether the defendant has a prima facie meritorious defense; (3)
whether the defaulting defendant’s conduct is excusable or culpable; and (4) the effectiveness of
Plaintiffs do not oppose, and ask the Court to grant, Defendants’ motion to vacate the default.
D.E. 48-1 at 24 (“Plaintiffs respectfully request that the Court deny that aspect of Defendants’
‘delay’ motion that seeks costs or sanctions, grant the balance of the issues . . . vacate the default.”);
see also D.E. 52 at 6 (“[E]veryone agrees that the amended complaint should be filed, that the
default vacated, and a briefing schedule set for the motion to dismiss.”)).
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alternative sanctions.” Accurate Abstracts, LLC v. Havas Edge, LLC, 2016 WL 7115894, at *1
(D.N.J. Apr. 21, 2016) (citing Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d Cir. 1987)).
The threshold question is whether Defendants assert a meritorious defense. See $55,518.05
in U.S. Currency, 728 F.2d at 195. Defendant contends “[a]ny of the defenses in the Motion to
Dismiss, standing alone, is a sufficiently meritorious defense to warrant setting aside the Clerk’s
default.” D.E. 45 at 11. Defendants do “not have to show that they will prevail at trial; rather, all
they must show is that, on its face, their defense is litigable.” Beauty Plus Trading Co. v. Bee
Sales Co., No. CV158502ESMAH, 2017 WL 706604, at *3 (D.N.J. Feb. 21, 2017) (quoting
Glashofer v. New Jersey Manufacturers Ins. Co., No. CV 15-3601 (RBK/AMD), 2016 WL
4204549, at *3 (D.N.J. Aug. 9, 2016)). Defendants have presented evidence of litigable defenses
through reference to their motion to dismiss, D.E. 24 – which Defendants’ represent they will rely
on to address Plaintiffs’ FAC, see D.E. 47 at 2, ¶ 6 – and the accompanying affidavits and exhibits 3
submitted with the motion, D.E. 26, D.E. 27, D.E. 28. Moreover, Defendants’ opposition sets
forth additional potential defenses which they “have not yet had a procedural opportunity to raise.”
D.E. 45 at 12-13. This factor weighs in favor of vacating the default.
Vacating the default would not prejudice Plaintiffs. There has been no undue delay;
Defendants have actively litigated this matter from the onset. The fact that Plaintiffs will have to
continue litigating this matter does not constitute undue prejudice, particularly at this early stage.
Beauty Plus Trading Co. v. Bee Sales Co., No. CV158502ESMAH, 2017 WL 706604, at *3
The Court may not necessarily consider these documents in deciding Defendants’ motion to
dismiss. Buchspies v. Pfizer, Inc., No. CV 18-16083, 2019 WL 5078853, at *2 (D.N.J. Oct. 10,
2019) (“In deciding a motion to dismiss, a court ordinarily considers only the factual allegations,
exhibits attached to the complaint, and matters of public record . . . [and] may also rely on ‘a
document integral to or explicitly relied upon in the complaint.’” (quoting U.S. Express Lines Ltd.
v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002)). However, the Court may still rely on these papers
in evaluating whether Defendants have shown a litigable defense in this matter.
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(D.N.J. Feb. 21, 2017) (stating that “‘[d]elay in realizing satisfaction on a claim rarely serves to
establish the degree of prejudice’ sufficient to warrant the denial of a motion to vacate default”
(quoting Feliciano v. Reliant Tooling Co., 691 F.2d 653, 657 (3d Cir. 1982)).
The Court also finds that Defendants are not culpable for the default. Defendants appeared
in this matter, D.E. 5, D.E. 6; opposed Plaintiffs’ motion for an order to show cause, D.E. 17; and
timely moved to dismiss Plaintiffs’ initial Complaint, D.E. 24. Defendants requested an extension
from Plaintiffs to respond to the FAC. See D.E. 44-1 at 4. Defendants’ counsel further explained
that his failure to file a motion to dismiss the FAC was caused by a misinterpretation of Judge
Falk’s instructions. D.E. 34 at 2 (“Defendants understood that Order to mean that all outstanding
issues would be addressed via Zoom on October 27, 2020.”). Defendants’ counsel further
represents that the initial motion to dismiss, D.E. 24, “would be the operative response upon which
Defendants would rely.” D.E. 47 at 2, ¶ 6. Default was entered based on Plaintiffs’ counsel’s
improper conduct of inaccurately representing to the Clerk that Defendants had not requested an
extension when they had. Compare D.E. 33-1 at 2, ¶ 6 with D.E. 44-1 at 4. Defendants are not
culpable for the default.
For the same reasons, the Court finds that entry of default would be an inappropriate
sanction here since Defendants are not culpable.
Accordingly, Defendants’ motion to vacate the Clerk’s entry of default is granted.
B. Plaintiffs’ Motion to Deposit Funds
Plaintiffs’ cross-motion requests the Court to order Defendants to deposit $660,000.00 plus
accrued interest into the Court’s registry under Fed. R. Civ. P. 67. D.E. 48-1 at 24. In support of
their cross-motion, Plaintiffs argue the $660,000.00 constitutes disputed funds. D.E. 48-1 at 25.
Defendants counter that the cross-motion “seeks what amounts to an affirmative injunction forcing
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Defendants to place $660,000 into the Court’s registry” when there is no basis to do so and that
Plaintiffs’ request is inconsistent with Rule 67. D.E. 51 at 9.
Rule 67 provides as follows:
(a) Depositing Property. If any part of the relief sought is a money
judgment or the disposition of a sum of money or some other
deliverable thing, a party--on notice to every other party and by
leave of court--may deposit with the court all or part of the money
or thing, whether or not that party claims any of it. The depositing
party must deliver to the clerk a copy of the order permitting deposit.
(b) Investing and Withdrawing Funds. Money paid into court under
this rule must be deposited and withdrawn in accordance with 28
U.S.C. §§ 2041 and 2042 and any like statute. The money must be
deposited in an interest-bearing account or invested in a courtapproved, interest-bearing instrument.
Fed. R. Civ. P. 67. The Court has discretion to permit a deposit pursuant to Rule 67. Progressive
Cas. Ins. Co. v. Drive Trademark Holdings LP, 680 F. Supp. 2d 639, 641 (D. Del. 2010).
The plain language of the Rule indicates that a motion to deposit may be made by the party
holding the funds in dispute – the opposite of what Plaintiffs’ seek. See id. Plaintiffs do not seek
to deposit anything; rather, they seek an order forcing “the Defendants to deposit in the Court the
$660,000, plus accrued interest pending the outcome of this case.” See D.E. 48-1 at 24. 4 Plaintiffs
request for the Court to force Defendants to deposit funds with the Court is inconsistent with the
plain language of Rule 67. Guthartz v. Park Ctr. W. Corp., No. 07-80334-CIV, 2008 WL 2949515,
at *1 (S.D. Fla. July 29, 2008) (“[T]he plain language of this rule, i.e., “may deposit,” only permits
for a voluntary deposit of funds or things . . . Defendants do not cite . . . any federal cases,
Although Defendants did make a request to deposit funds with the Court by letter earlier in this
case, see D.E. 34, Defendants failed to make a formal motion to that effect and are awaiting a
ruling on the current cross-motion before making a final decision. See D.E. 51 (“[T]he Defendants
wish to wait until the Court rules on Defendants’ Motion before determining whether to place
$660,000 into the Court’s registry.”).
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pertaining to Rule 67, that contemplate compelling an unwilling party to deposit a disputed fund
or thing into the registry. This Court will not adopt such an interpretation that runs afoul of the
clear language of the rule.”); Rogath v. Siebenmann, 941 F. Supp. 416, 425 (S.D.N.Y.
1996), vacated on other grounds, 129 F.3d 261 (2d Cir. 1997) (“The language of [Rule 67] does
not provide the Court with the authority to compel Defendant to deposit money with the Court.”);
Lefer v. Murry, No. CV 13-6-BLG-DWM, 2013 WL 932062, at *1 (D. Mont. Mar. 8, 2013)
(stating that Rule 67 “does not contemplate use by a party to compel another to produce money or
documents.” (citing Guthartz, No. 07-80334-CIV, 2008 WL 2949515, at *1 and Rogath, 941 F.
Supp. at 425)).
For the foregoing reasons, Plaintiffs’ cross-motion for an order requiring Defendants to
deposit $660,000.00 into the Court’s registry is denied.
C. The Parties’ Motions for Sanctions
Both parties seek sanctions against each other. D.E. 43 at 1; D.E. 48-1 at 25-27. Although
Defendants’ notice of motion indicates they are seeking sanctions pursuant to 28 U.S.C. § 1746,
D.E. 43 at 1, Defendants’ memorandum of law does not discuss a basis for sanctions until the
conclusion, where Defendants argue that Plaintiffs’ should be sanctioned because “[m]isleading
the Court under penalty of perjury, pursuant 28 U.S.C. 1746, should have some consequences.”
D.E. 45 at 16. Moreover, in reply, Defendants discuss the possibility of sanctions under 28 U.S.C.
§ 1927 and through the Court’s inherent power. D.E. 49 at 6. For their part, Plaintiffs seek
sanctions pursuant to 28 U.S.C. § 1927. D.E. 48-1 at 25-27.
28 U.S.C. § 1746 is not an appropriate basis for sanctions. That statute merely provides
the proper manner for subscribing a “declaration, verification, certificate, statement, oath, or
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affidavit.” See 28 U.S.C. § 1746. To the extent Defendants seek sanctions under that provision,
their motion is denied.
Section 1927 provides as follows:
Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof 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. “Section 1927 ‘requires a court to find an attorney has (1) multiplied
proceedings; (2) in an unreasonable and vexatious manner; (3) thereby increasing the cost of the
proceedings; and (4) doing so in bad faith or by intentional misconduct.” Ferguson v. Valero
Energy Corp., 454 F. App’x 109, 112 (3d Cir. 2011) (quotation omitted). “The principal purpose
of sanctions under § 1927 is the deterrence of intentional and unnecessary delay in the
proceedings.” Id. (internal quotation and bracket omitted). “[S]anctions may not be imposed under
this statute against attorneys for vexatious and unreasonable multiplication of proceedings absent
a finding that counsel’s conduct resulted from bad faith, rather than misunderstanding, bad
judgment, or well-intentioned zeal.” Grider v. Keystone Health Plan Cent, Inc., 580 F.3d 119, 142
(3d Cir. 2009). “Indications of this bad faith are findings that the claims advanced were meritless,
that counsel knew or should have known this, and that the motive for filing the suit was for an
improper purpose such as harassment.” In re Prudential Ins. Co. Am. Sales Practice Litig. Agent
Actions, 278 F.3d 175, 188 (3d Cir. 2002) (quotation omitted). The attorney’s actions “must be of
an egregious nature, stamped by bad faith that is violative of recognized standards in the conduct
of litigation.” Grider, 580 F.3d at 142. The Third Circuit has cautioned that “[t]he power to
sanction under § 1927 necessarily carries with it the potential for abuse, and therefore the statute
should be construed narrowly and with great caution so as not to stifle the enthusiasm or chill the
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creativity that is the very lifeblood of the law.” LaSalle Nat. Bank v. First Connecticut Holding
Grp., LLC, 287 F.3d 279, 289 (3d Cir. 2002) (quotation omitted).
In addition, a court also has the inherent authority to order sanctions. “A court may resort
to its inherent power to impose sanctions even if much of the misconduct at issue is also
sanctionable under statute or rules of court.” In re Prudential Ins. Co. Am. Sales Practice Litig.
Agent Actions, 278 F.3d 175, 189 (3d Cir. 2002) (citation omitted). “However, because of their
very potency, inherent powers must be exercised with restraint and caution.” Id. (brackets and
citation omitted). “Although a court retains the inherent right to sanction when rules of court or
statutes also provide a vehicle for sanctioning misconduct, resort to these inherent powers is not
preferred when other remedies are available.” Id. “Therefore, generally, a court’s inherent power
should be reserved for those cases in which the conduct of a party or an attorney is egregious and
no other basis for sanctions exists.” Id. (brackets and citation omitted).
Defendants seek sanctions based on Plaintiffs’ “intentional misleading application [for
entry of default] in violation of a Court Order.” D.E. 49; see also D.E. 45 at 16. However,
Defendants’ counsel raised the prospect of sanctions under 28 U.S.C. § 1927 or the Court’s
inherent authority for the first time in reply. D.E. 49 at 6-7. Thus, the Court denies Defendants’
request for sanctions on this basis. See e.g., Cobra Enterprises, LLC v. All Phase Servs., Inc., No.
CV 20-4750 (SRC), 2020 WL 2849892, at *1 (D.N.J. June 1, 2020) (“[T]his is a new argument
raised in a reply brief and will not be considered . . . this Court will not accept arguments offered
for the first time in the reply brief, as they were not properly asserted in the opening brief and
Plaintiffs have not had the opportunity to respond to them.”). Even ignoring Defendants’ failure
to timely raise a proper basis for sanctions, Plaintiffs’ conduct was not sanctionable under 28
U.S.C. § 1927. The plain language of that section indicates that sanctions are appropriate for an
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attorney “who so multiplies the proceedings.” 28 U.S.C. § 1927. The Court does not find that
Plaintiffs’ counsel has multiplied the proceedings here because he offered, at least twice, to vacate
the default on consent prior to Defendants’ filing their motion to vacate. See D.E. 48-2 at 6, ¶ 22;
see also id. at 62 (email from Plaintiffs’ counsel stating, in relevant part, “I am happy to vacate the
default.”)). In addition, Defendants have not cited to any cases awarding sanctions under 28 U.S.C.
§ 1927 in similar circumstances. The Court does not find that Plaintiffs’ counsel’s conduct with
respect to the default was sufficiently egregious to warrant sanctions under 28 U.S.C. § 1927 or
this Court’s inherent authority.
The Court notes, however, that Plaintiffs’ counsel submitted at least two apparently false
statements under penalty of perjury. 5 See D.E. 33-1 at 2, ¶ (Plaintiffs’ counsel declaring “under
penalty of perjury that to the best of my knowledge the foregoing is true and correct” in support
of request for Clerk’s entry of default); D.E. 48-2 ¶ (Plaintiffs’ declaring “under penalty of perjury
that to the best of my knowledge the foregoing is true and correct” in support of cross-motion).
First, Plaintiffs’ counsel submitted an executed declaration stating, in relevant part, that
“Defendants have not requested or been granted an extension of time to answer or otherwise
respond to the Amended Complaint.” D.E. 33-1 at 2, ¶ 6. This was inaccurate, and apparently
false, because Defendants’ counsel unequivocally requested an extension to respond to the FAC.
D.E. 44-1 at 3-4. Plaintiffs’ counsel also declared under oath that Defendants’ counsel alleged that
the Clerk’s entry of default was improper “for the first time” in response to Plaintiffs’ counsel’s
Defendants’ counsel has also presented evidence that Plaintiffs’ counsel improperly contacted
the Defendants in this case, see D.E. 44 at 9-10, ¶¶ 74-75, see also D.E. 44-2, without their
counsel’s consent in violation of New Jersey Rule of Professional Conduct 4.2. N.J.R.P.C. 4.2
(“In representing a client, a lawyer shall not communicate about the subject of the representation
with a person the lawyer knows or by the exercise of reasonable diligence should know, to be
represented by another lawyer in the matter.”).
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email of December 9, 2020. D.E. 48-2 at 6, ¶¶ 19-21; D.E. 48-1 at 22-23 (“Plaintiffs’ counsel
wrote to [Defendants’ counsel] again, on December 9, 2020 . . . [Defendants’ counsel] responded
the next day, and, for the first time, alleged the default was entered improperly.” (emphasis added
(citing D.E. 48-2 at 6, ¶ 20)). This statement is also inaccurate and apparently false. Defendants’
counsel filed a letter on the docket on September 14, 2020 challenging the validity of the default
and, among other things, requesting the Court to remove “the clerk’s default.” D.E. 34 at 3. And
Plaintiffs’ counsel filed a letter in response the same day. D.E. 35. Plaintiffs’ counsel’s conduct
is highly problematic. However, such conduct is more properly redressable under Fed. R. Civ. P.
11 as opposed to sanctions under section 1927. See In re Schaefer Salt Recover, Inc., 542 F.3d 90,
102 (3d Cir. 2008) (“[T]here are distinctions between Rule 11 . . . and § 1927 . . . . Importantly,
for example, § 1927 explicitly covers only the multiplication of proceedings that prolong the
litigation of a case . . . .” (emphasis added)). Defendants do not seek sanctions pursuant to Rule
11. Accordingly, Defendants’ motion for sanctions is denied.
Plaintiffs’ motion for sanctions under 28 U.S.C. § 1927 is also denied. Defendants’
prosecution of a successful motion to vacate the Clerk’s entry of default was not “egregious” or
done in “bad faith.” Grider, 580 F.3d at 142. Nor was Defendants’ counsel’s refusal to withdraw
the motion in response to Plaintiffs’ offer to vacate the default on consent “egregious” or in “bad
faith” given Defendants’ continued interest in prosecuting their motion for sanctions. Plaintiffs’
motion for sanctions is denied.
D. A Final Observation
Counsel for both parties have resorted to ad hominem attacks against one another in their
filings. See D.E. 51 at 9; D.E. 48-1 at 4 (stating Defendants’ counsel “became ‘cute’ when asked
a direct question about the location of the funds.”)). Counsel have also made negative comments
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concerning the Court and Judge Falk in their submissions. See D.E. 51 at 26 (“Plaintiffs know
there will be no consequences for lying to this Court in order obtain a default in violation of Hon.
Falk’s Order.”); D.E. 34 (Defendants’ counsel stating in a letter to Judge Falk that Plaintiffs’ “may
have identified a weakness in the federal judiciary, in that they can lie and ignore this court at will
with no consequences[.]”)); see also D.E. 53 (Plaintiffs’ counsel stating in a letter to Judge Falk
“How broken is this system?”)).
The Court expects more from counsel, and the Rules of Professional Conduct demand it.
This matter is barely out of the starting gate, and counsel have already engaged in conduct that the
Court finds inappropriate. This fact does not bode well for the future of the litigation, but more
importantly, it does not bode well for counsel. As a result, lead counsel for both Plaintiffs and
Defendants must submit a written letter on the docket within seven (7) days indicating that counsel
understands their obligations under the Rules of Professional Conduct, will abide by such rules,
and will conduct this litigation in a professional manner. Counsel are on notice that if this behavior
continues, the Court will order corrective action, starting with the requirement that counsel attend
a continuing legal education course on civility and professionalism in the practice of law.
For the reasons stated above, Defendants’ motion is granted in part and denied in part and
Plaintiffs’ cross-motion is denied. An appropriate Order accompanies this Opinion.
Dated: February 17, 2021
John Michael Vazquez, U.S.D.J.
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