Mealus v. Nirvana Spring Water N.Y. Inc. et al

Filing 79

MEMORANDUM-DECISION AND ORDER denying 70 Motion for Sanctions; granting 76 Motion for Leave to File: The Court hereby ORDERS that Defendant's letter motion seeking leave to file Plaintiff's certificate of conviction (Dkt. No. 76) is GR ANTED; and the Court further ORDERS that Defendant's motion for sanctions (Dkt. No. 70) is DENIED; and the Court further ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision and Order on all parties in accordance with the Local Rules. Signed by U.S. District Judge Mae A. D'Agostino on 7/28/15. (ban)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
CHERIE MEALUS,
Plaintiff,
vs.

7:13-cv-313
(MAD/DEP)

NIRVANA SPRING WATER N.Y. INC.; and
MANSUR RAFIZADEH, individually,
Defendants.
____________________________________________
APPEARANCES:

OF COUNSEL:

PHILLIPS & ASSOCIATES,
ATTORNEYS AT LAW, PLLC
45 Broadway, Suite 620
New York, New York 10006
Attorneys for Plaintiff

JESSE C. ROSE, ESQ.

PERTZ & PERTZ, PLLC
12280 Rt. 365
Remsen, New York 13438
Attorneys for Defendant
Mansur Rafizadeh
Mae A. D'Agostino, U.S. District Judge:

RICHARD PERTZ, ESQ.

MEMORANDUM-DECISION AND ORDER
Plaintiff commenced this action pursuant to Title VII of the Civil Rights Act of 1964
("Title VII") and the New York State Human Rights Law ("NYSHRL"). See Dkt. No. 1. On
February 15, 2014, Defendants filed motions for summary judgment. In a September 16, 2014
Memorandum-Decision and Order, this Court granted Defendants' motions for summary
judgment. See Dkt. No. 68.
Presently before the Court is Defendant Mansur Rafizadeh's motion for sanctions against
Plaintiff and her counsel.
II. BACKGROUND

Defendant Nirvana Spring Water N.Y. Inc. ("Nirvana") is a drinking water bottling
company with its principal place of business in Forestport, New York. See Dkt. No. 53 at 1.
Defendant Mansur Rafizadeh, age eighty-three, serves as the chairman of the board of directors.
Plaintiff Cherie Mealus was an employee at Nirvana from June 2004 through March 2005. After
being hired and rehired numerous times, Plaintiff worked at Nirvana from March of 2009 until
February 8, 2012.
On January 10, 2012, Barrett Paving Materials, Inc. received an application for
employment from Plaintiff. See Dkt. No. 53 at 5. On February 3, 2012, Plaintiff informed her
supervisor that she had obtained employment at Barrett Paving and would be leaving her job at
Nirvana as of February 17, 2012. Less than a week later, on February 8, 2012, Plaintiff was
informed by Barrett Paving that they would not be hiring her after all. On the evening of
February 8, 2015, the topic of Plaintiff's alleged sexual harassment appeared for the first time in
Plaintiff's correspondence with the person she blamed for the loss of her job opportunity with
Barrett Paving. See Dkt. No. 38 at 11; Dkt. No. 53. Plaintiff proceeded to compose an email
listing "a few examples of personal harassment and sexual harassment by Mansur." See Dkt. No.
38-2 at 2. After providing eight examples, Plaintiff stated as follows:
My lawyer is ready to proceed with a very public sexual harassment
suit against Mansur and Nirvana ... Also I have about a hundred or
so pictures of dirty micro tests from the Lab. I have addresses of all
the states you send water and will send the pictures to all the
companies you bottle water for and all the state health departments.
That could be very costly to your company. I will go public as
well, take the pictures to television stations, newspapers, post all the
pics on facebook and myspace and have all my friends repost and I
have friends in all states except Hawaii which that one done [sic]
matter anyway. . . . I do not want to hear back from you and
anything I do hear back from you can and will be used in my
lawsuit if I proceed with it. My lawyer told me to inform you of
that. All I am asking is that you don't deny my unemployment and
want a settlement in the amount of $5000, 1 thousand per year of
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service. I want that within on[e] week from today or this all goes
public. I will be sending the pictures as well so you know I am not
lying about having them. My lawyer is prepared to sue for way
more than 5000 for the treatment I endured while employed at
Nirvana for almost 5 years. . . . I want unemployment, the small
settlement and my last paycheck and then I will go away forever
and you will never hear from me again, otherwise me and 2 others
are prepared to go ahead with a very public sexual harassment
lawsuit.1
During Plaintiff's employment with Nirvana, several of her colleagues witnessed her
taking photographs of water samples from the lab that showed contamination. According to
Plaintiff's supervisor Leo Hellinger, in substance, Plaintiff said "[i]f anything happened, if I got
fired or if I needed a job later, this would be an insurance policy to get back in. She said I have a
relative to whom I could show this and have this place shut down." Id. During her deposition,
Plaintiff indicated that she took the pictures because she "just wanted to have [them] handy" and
because "[s]omeone has got to shut that place down." See Dkt. No. 38-3 at 179.
Plaintiff originally retained the Derek T. Smith Law Group on or about February 9, 2012.
See Dkt. No. 71 at 7. Plaintiff argues that "their office conducted a reasonable inquiry into
Plaintiff's claims," including obtaining supporting evidence from a witness which "confirmed
aspects of Plaintiff's complaint," such as "stating that she was 'called a cunt, screamed at and
humiliated,' told to 'drink out of a hose like a dog,' and that she had witnessed Defendant touch
Plaintiff's arm and rub her." Id. Further, Plaintiff alleges that medical documentation was also
obtained, which demonstrated that Plaintiff sought treatment for depression and anxiety due to

Although Plaintiff indicates in the email that she had consulted with an attorney who was
ready to proceed with a sexual harassment suit against Defendants, during her deposition Plaintiff
admitted that she did not, in fact, have an attorney who was ready to proceed with her lawsuit.
See Dkt. No. 38-2 at 2-3; see also Dkt. No. 38-3 at 164-65.
1

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sexual harassment, accompanied by a note stating that Plaintiff was advised against working at
Defendant's factory due to issues she experienced. See id. at 7-8.
After the Derek T. Smith Law Group sent a claim letter to Defendants on or around
February 28, 2012, which was accompanied by a draft complaint that was the basis for Plaintiff's
EEOC charge and federal complaint, Plaintiff's case was referred to Phillips & Associates, PLLC,
in or about March of 2012. See id. at 8. Plaintiff's case was filed with the EEOC on or about
April 2, 2012 with a sworn statement from Plaintiff. Thereafter, Plaintiff's complaint was filed on
March 19, 2013 with this Court. Plaintiff's complaint contained the following causes of action:
(1) Title VIII hostile work environment; (2) Title VII retaliation; (3) NYSHRL discrimination; (4)
NYSHRL retaliation; and (5) common law assault. See Dkt. No. 1.
On February 15, 2014, Defendants filed motions for summary judgment. In a September
16, 2014 Memorandum-Decision and Order, this Court granted Defendants' motions for summary
judgment as to each of Plaintiff's causes of action. Specifically, with respect to Plaintiff's hostile
work environment claims, the Court found as follows:
Even if this action did not warrant dismissal under the exception in
Jeffreys, the undisputed facts clearly show that Plaintiff has failed
to produce sufficient evidence to demonstrate that the workplace
was "'permeated with discriminatory intimidation, ridicule, and
insult, that [was] sufficiently severe or pervasive to alter the
conditions of [Plaintiff's] employment and create an abusive
working environment.'" Gorzynski, 596 F.3d at 102 (quotation
omitted). Even if the Court were to find that the environment was
objectively hostile and abusive, which it does not, the evidence also
makes clear that Plaintiff did not subjectively perceive the
environment to be abusive. See id. (citation omitted); Meritor
Savings Bank, FSB v. Vinson, 477 U.S. 57, 68 (1986) (indicating
that the plaintiff's behavior may be considered in evaluating
whether the conduct was unwelcome). Plaintiff has made only
conclusory allegations, regarding sporadic incidents, many of which
were not abusive and cannot be said to have occurred because of
Plaintiff's sex.
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See Dkt. No. 68 at 22. Further, the Court found that Plaintiff failed to make out a prima facie case
of retaliation. The Court noted that Plaintiff's "contradictory and conclusory allegations regarding
Defendant Rafizadeh's conduct towards her are almost entirely refuted by the evidence submitted
by Defendants. Even assuming that Defendant Rafizadeh belittled, insulted and shouted at
Plaintiff, the evidence submitted fails to demonstrate any causal connection between such actions
and any alleged protected activity." See Dkt. No 68 at 25.
In regard to Plaintiff's email sent on February 8, 2014, the Court found that Plaintiff's
argument that the email was simply a layperson attempting to settle her sexual harassment case on
her own without the assistance of an attorney was entirely without merit. Specifically, the Court
concluded:
Plaintiff's argument that the "statements relating to water samples
are never directly connected to any request for money" is at best
disingenuous. Immediately following Plaintiff discussing the
pictures of the dirty water samples and that she is prepared to send
the pictures to all the state health departments and companies that
Nirvana does business with, she then demands $5,000, that
Defendants' not deny her unemployment benefits, and then issues
the following threat: "I want that within on[e] week from today or
this all goes public." Dkt. No. 38-2 at 3. Although Plaintiff may
not be an attorney and does use the word "settlement" in the email,
the quoted language is clearly a threat that she will go public with
her pictures of dirty water samples unless she gets $5,000 and
unemployment. Had Plaintiff not spent such a significant portion of
the email discussing the pictures she has and all the ways that she
can disseminate them, Plaintiff's interpretation may have been
plausible.
On October 15, 2014, Defendant Mansur Rafizadeh requested leave to move for sanctions
against Plaintiff and her counsel pursuant to Rule 11, Section 1927 and the Court's inherent
power, arguing that the motivation behind Plaintiff's "abusive lawsuit," was not that " she
believed she was sexually harassed," but rather that she "needed money after she left her job, and

5

wanted to punish her former employers for not paying her to keep silent."2 See Dkt. No. 70-3.
According to Defendant, Plaintiff had an improper purpose for this litigation, as evidenced by
Plaintiff's February 9 email to blackmail Defendants with pictures of dirty water samples, and that
the lawsuit and email illustrate a "single, integrated attempt at extorting a $5,000 payment" from
Defendants. See Dkt. No. 72 at 9. Collectively, Defendant claims that Plaintiff's conduct is
sanctionable for the following reasons: (1) Plaintiff's claim was brought in bad faith as part of an
extortion scheme; (2) Plaintiff's claim did not have a colorable basis; and (3) Plaintiff's counsel's
response to Defendant's notice of the motion for sanctions did not constitute a withdrawal of the
offending claims under Rule 11. With respect to Plaintiff's counsel, Defendant argues that
Plaintiff's counsel's conduct is likewise sanctionable because: (1) Plaintiff's counsel pursued the
case without properly investigating; (2) Plaintiff's counsel continued litigating the claim even
after becoming aware of its bad faith nature; and (3) Plaintiff's counsel abetted the bad faith claim
by failing to disclose evidence. Defendant seeks relief in the form of a complete award of all
attorney's fees for the litigation. See Dkt. No. 72 at 11.
III. DISCUSSION
The central objective behind Rule 11 is the deterrence of "baseless filings in district
courts." See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). "Drawing a line
between zealous advocacy and frivolous conduct, Rule11 provides a vehicle for sanctioning an
attorney, a client, or both." United States v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen

Defendant also seeks leave from the Court to submit Plaintiff's certificate of conviction.
The Court grants this motion and will consider this evidence insofar as it is relevant to the
pending motion for sanctions. It is assumed throughout this analysis that Plaintiff pleaded guilty
to grand larceny in the fourth degree pursuant to Article 155.30 of the Penal Law. While
extortion falls within the definition of grand larceny under Article 155.30, Plaintiff's certificate of
conviction alleges no further facts other than Plaintiff's plea of guilty to grand larceny in the
fourth degree.
2

6

& Helpers of Am., AFL-CIO, 948 F.2d 1338, 1343 (2d Cir. 1991). Specifically, Rule 11 provides
as follows:
By presenting to the court a pleading, written motion, or other paper
– whether by signing, filing, submitting or later advocating it – an
attorney or unrepresented party certifies that to the best of the
person's knowledge, information, and belief, formed after an inquiry
reasonable under the circumstances: it is not being presented for
any improper purpose, such as to harass, cause unnecessary delay,
or needlessly increase the cost of litigation; the claims, defenses,
and other legal contentions are warranted by existing law or by a
nonfrivolous argument for extending, modifying, or reversing
existing law or for establishing new law; 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; and the denials of factual contentions are
warranted on the evidence or, if specifically so identified, are
reasonably based on belief or a lack of information.
Fed. R. Civ. P. 11. "[T]he standard for triggering the award of fees under Rule 11 is objective
unreasonableness." Margo v. Weiss, 213 F.3d 55, 65 (2d Cir. 2000) (citing Calloway v. Marvel
Entertainment Group, F.2d 1452, 1469-70 (2d Cir. 1988)).
In analyzing a motion for sanctions pursuant to Rule 11, the district court is required to
"avoid hindsight and resolve all doubts in favor of the signer." See Carrasquillo v. City of Troy,
No. 1:02–CV–01231, 2006 WL 304031, *4 (N.D.N.Y. Feb. 8, 2006) (citing Oliveri v. Thompson,
803 F.2d 1265, 1272 (2d Cir. 1986)). The imposition of sanctions upon a party is a discretionary
decision for the district court, and must be exercised with caution. See Cerrone v. Cahill, No. 95CV-241, 2001 WL 1217186, *16 (N.D.N.Y. Sept. 28, 2001) (citing Knipe v. Skinner, 19 F.3d 72,
78 (2d Cir. 1994)). Accordingly, Rule 11 is violated only when "it is patently clear that a claim
has absolutely no chance of success." Carrasquillo, 2006 WL 304031 at *4 (internal citations
omitted).

7

A federal court may impose sanctions against an offending party pursuant to its inherent
power, which stems from the "'control necessarily vested in courts to manage their own affairs so
as to achieve the orderly and expeditious disposition of cases.'" Chambers v. NASCO, Inc., 501
U.S. 32, 43 (1991) (quotation omitted). In order for a district court to impose sanctions pursuant
to its inherent power, it must find that: "(1) the challenged claim was without a colorful basis and
(2) the claim was brought in bad faith, i.e., motivated by improper purposes such as harassment or
delay." Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999) (citing
Milltex Indus. Corp. v. Jacquard Lace Co., 55 F.3d 34, 38 (2d Cir. 1995)).
The district court may also rely upon Section 1927 as a basis for imposing sanctions. It is
well established that the imposition of sanctions under Section 1927 requires "'a clear showing of
bad faith on the part of an attorney.'" Id. at 336 (quotation omitted). "As with sanctions imposed
pursuant to a court's inherent power, bad faith may be inferred . . . 'only if actions are so
completely without merit as to require the conclusion that they must have been taken for some
improper purpose such as delay.'" Id. (quotation omitted). Whereas sanctions imposed under
Rule 11 and the district court's inherent power can be awarded against both an attorney or client,
sanctions awarded pursuant to Section 1927 can only be imposed against an offending attorney.
See Oliveri, 803 F.2d at 1273.
A.

Timeliness of Defendant's Motion
"[A] party moving for Rule 11 sanctions must do so in a filing 'made separately from any

other motion." Lawrence v. Richman Grp. of CT LLC, 620 F.3d 153, 156 (2d Cir. 2010); see also
Fed. R. Civ. P. 11(c)(2). "Rule 11's safe harbor provision provides an opportunity to withdraw or
correct a challenged submission by requiring initial service of the motion, but delays filing or
presentation of the motion to the court for 21 days; filing of the motion is permitted 21 days after
8

service only if the challenged submission is not 'withdrawn or appropriately corrected.'" In Re
Pennie & Edmonds LLP, 323 F.3d 86, 89 (2d Cir. 2003) (quotation omitted). The purpose of the
safe harbor provision is to "permit sanctions to be imposed on a party who has violated Rule
11(b) only after that party is provided with notice of the pleading defect and afforded an
opportunity to correct or withdraw the defective filing." Lawrence, 620 F.3d at 159.
Plaintiff argues that "Defendants sent their safe harbor letter only after the motion for
summary judgment was fully briefed and then moved for sanctions after the case was dismissed."
See Dkt. No. 71 at 12. However, as Defendant correctly asserts, the motion was served in
accordance with Rule 11's safe harbor provision. Plaintiff was served with Defendant's safe
harbor letter in April of 2014. See Dkt. No. 70-4. The Court entered final judgment as to
Defendant's motion for summary judgment on September 16, 2014. See Dkt. No. 68. As such,
Defendant's motion for leave to file sanctions is timely. See Patrizzi v. Bourne in Time, Inc., No.
11 Civ. 2386, 2013 WL 316148, *3 (S.D.N.Y. Jan. 28, 2013) (finding that a motion for leave to
file Rule 11 sanctions was not untimely where it was filed five days after the court dismissed the
claims because, "by the time it was filed with the Court, the proposed sanctions motion had long
since been served on plaintiff's counsel"); see also Chambers, 501 U.S. at 56 (holding that "even
under Rule 11, sanctions may be imposed years after a judgment on the merits").
B.

Motion for Sanctions Against Plaintiff's Counsel
Rule 11 "imposes a duty on attorneys to certify that they have conducted a reasonable

inquiry and have determined that any filings with the court are well grounded in fact, legally
tenable, and not 'interposed for any improper purpose.'" Cooter & Gell, 496 U.S. at 393
(quotation omitted). The reasonableness of an attorney's inquiry depends on the surrounding
circumstances, including factors such as "how much time for investigation was available to the
9

signer; whether he had to rely on a client for information as to the facts underlying the pleading
...; or whether he depended on forwarding counsel or another member of the bar." Hadges v.
Yonkers Racing Corp., 48 F.3d 1320, 1329 (2d Cir. 1995). Sanctions are appropriate against an
attorney if a "factual allegation in a complaint, motion or other paper filed with the court has no
evidentiary support ... unless there [is] a specific disclaimer that additional investigation is
necessary." O'Brien v. Alexander, 101 F.3d 1479, 1489 (2d Cir. 1996) (citation omitted). The
allegations in question must be "utterly lacking in support" in order to be deemed sanctionable.
Id. Rule 11 sanctions are not warranted where the "evidentiary support is merely weak and the
claim is unlikely to prevail." See Scientific Components Corp. v. Sirenza Microdevices, Inc., No.
03-CV-1851 NGG, 2007 WL 1026411, *2 (E.D.N.Y. Mar. 30 2007). Further, the Second Circuit
has repeatedly held that an attorney is "entitled to rely on the objectively reasonable
representations of the client." Id.; see also Calloway, 854 F.2d at 1470. Thus, an attorney need
not certify that the representations are "well grounded in fact," but rather that the "factual
contentions have evidentiary support." Hadges, 48 F.3d at 1329-1330; Fed. R. Civ. P. 11(b); see
also Calloway, 854 F.2d at 1470 (holding that when a claim is not supported by any evidence at
any stage of the proceedings, sanctions are appropriate).
Here, Defendant argues that Plaintiff's counsel's conduct is sanctionable for the following
reasons: (1) Plaintiff's counsel pursued the case without properly investigating; (2) Plaintiff's
counsel continued litigating the claim even after becoming aware of its bad faith nature; and (3)
Plaintiff's counsel abetted the bad faith claim by failing to disclose evidence. Defendant asserts
that a reasonable inquiry conducted by Plaintiff's counsel "would have included careful
evaluation of medical and testimonial evidence" to determine if Plaintiff experienced an actual
injury, and an interview of "someone other than Plaintiff's best friend" to determine whether
10

anyone had witnessed sexual harassment against Plaintiff, before "representing that Plaintiff had
been damaged in the amount of $2,003,042." Dkt. No. 70-3 at 13.
The Court disagrees with Defendant's argument that Plaintiff's counsel did not conduct a
reasonable investigation under the circumstances. Several of the aforementioned factors
indicating the reasonableness of an attorney's investigation into his or her client's claims weigh in
favor of Plaintiff's counsel in this case. Plaintiff's counsel argues that he was entitled to rely on
the investigation done by Plaintiff's first attorney, and the Court agrees. See Dkt. No. 71 at 21.
Plaintiff's first attorney performed an investigation, obtained a written account from a witness,
and drafted a complaint detailing "private interactions between Plaintiff and Defendant
Rafizadeh." Id. As stated above, one factor to be taken into account in analyzing the
reasonableness of an investigation is whether the attorney in question depended on information
from previous counsel, and the Court finds that this factor weighs against sanctions.
Further, the Court finds that, due to the surrounding circumstances of this case, Plaintiff's
counsel was permitted to rely on his client for the facts underlying the pleading. Defendant
contends that Plaintiff's counsel's investigation was unreasonable in that Plaintiff's counsel relied
almost exclusively on Plaintiff's testimony and, further, "they had not interviewed a single person
who witnessed sexual harassment against their client. Had they had any contact with someone
other than Plaintiff's best friend, whom the Court confirmed witnessed nothing actionable, they
would have realized that no witnesses had witnessed anything actionable." See Dkt. No. 70-3 at
13. While this Court ultimately found that "Plaintiff relied almost exclusively on her own
testimony to support her claims, that the testimony is both contradictory and incomplete, and that
Plaintiff's testimony is contradicted by evidence in the record," Plaintiff's counsel presented a
plausible theory for the reliance on Plaintiff's facts. See Dkt. No. 68 at 14. Plaintiff concedes that
11

"no witness exists other than the Plaintiff and Defendant for a majority of Plaintiff's allegations,"
and that "there are many cases which proceed to trial based solely on the testimony of the plaintiff
because the acts complained of occurred only in the presence of one harasser and one victim."
See Dkt. No. 71 at 20. In Defendant's Memorandum of Law, Defendant argues that there was
"available evidence that contradicted Plaintiff's assertions" regarding her claims of sexual assault
against Defendant Rafizadeh. However, while the available evidence cited by Defendant was
sufficient to succeed on Defendant's motion for summary judgment, it does not follow that
Plaintiff's counsel should be subject to sanctions for failing to corroborate the facts underlying
Plaintiff's account through additional witnesses when, as Plaintiff's counsel suggests, Plaintiff
could have been the only witness to the offenses alleged in this lawsuit.
Though Plaintiff's testimony, together with additional evidentiary support, was insufficient
to survive Defendant's motion for summary judgment, the Court finds in the present motion that,
given the nature of Plaintiff's claims and the potential inability to corroborate her version of
events with testimony from witnesses, counsel's reliance on his client's testimony was reasonable.
The Court also finds that Plaintiff's counsel demonstrated a sufficient evidentiary basis to
withstand a motion for sanctions. Defendant argues that Plaintiff's counsel should have engaged
in additional discovery in this matter, such as subpoenaing a witness, interviewing present
employees at Nirvana, or visiting the work site, and that Plaintiff's counsel's failure to do so
should result in sanctions. However, through the course of this litigation, Plaintiff's counsel
served three separate sets of document requests, a set of interrogatories, took Defendant
Rafizadeh's and his brother's depositions, served subpoenas for phone records, and served HIPAA
releases to Plaintiff's medical providers. See Dkt. No. 71 at 24. Further, "Plaintiff sought
witnesses who would support her claims, albeit unsuccessfully. " Id. Plaintiff's counsel relied
12

upon a written account from a witness and a documentary account produced by Plaintiff's first
attorney, as well as medical documentation indicating that Plaintiff was subject to "emotional
distress because of her employer."3 See Dkt. No. 71 at 16, 22. While Defendant insists that
Plaintiff could have obtained additional evidence, the relevant standards under Rule 11 do not
require Plaintiff's counsel to conduct "exhaustive discovery." Scientific Components Corp., 2007
WL 1026411 at *5; see also Hochberg v. Howlett, No. 92 CIV. 1822 (RPP), 1993 WL 33367, *2
(S.D.N.Y. Feb. 4, 1993) (finding that "Rule 11 does not require that a plaintiff or her attorney
drive down every avenue of inquiry").
Defendant also alleges that Plaintiff's counsel should be subject to sanctions because
counsel became aware of the bad faith nature of Plaintiff's claim, but continued anyway. See Dkt.
No. 70-3 at 13. Defendant notes that the "red flag" came when Plaintiff's counsel initially read
Plaintiff's "extortionate" email to Defendants, which "triggered a need for heightened diligence to
verify that their client was telling them the truth." Id. at 15. However, while the Court recognizes
that Plaintiff's email might have brought into question Plaintiff's credibility, Plaintiff's counsel
was not required to abandon the case simply because his client's credibility was impacted by an
email that never directly disproved her allegations of sexual harassment. This case is not one in
which the attorneys, faced with misrepresentations by their client, failed to conduct any discovery
whatsoever other than speaking to the client. See Childs v. State Farm Mut. Auto. Ins. Co., 29
F.3d 1018 (5th Cir. 1994). Rather, as Plaintiff's counsel correctly asserts, there was no direct
evidence which refutes Plaintiff's claims of sexual harassment other than the testimony and

In her Rule 26(a) disclosures, Plaintiff asserted emotional damages in the amount of
$2,003,042. Plaintiff's counsel maintains that this was never done in a writing, as would be
required for a Rule 11 sanction, and the Court agrees. See Dkt. No. 71 at 23. After Defendants
objected, Plaintiff's counsel deemed this amount excessive and instead sought "garden variety"
damages due to Plaintiff's alleged emotional distress. See Dkt. No. 70-5 at ¶ 4.
3

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affidavits of individuals employed by Defendants as to her character and behavior in the
workplace. See Dkt. No. 71 at 25.
Defendant contends that "Plaintiff's counsel was on notice of the fraud when provided
with the extortionate email and blackmail pictures attached to the Answer in May of 2013." See
Dkt. No. 72 at 11. That Plaintiff's counsel was on notice of the email's existence does not amount
to knowledge of any misrepresentations made in regard to Plaintiff's claims for sexual harassment
and discrimination. Rather, as Plaintiff's counsel states, he relied upon the evidentiary support
accumulated in pretrial proceedings in making the determination that "the email, while certainly
affecting Plaintiff's credibility, did not destroy it." See id. at 25; see also Hadges, 48 F.3d at
1329. Lastly, Defendant argues that Plaintiff's counsel abetted the bad faith claim by failing to
disclose evidence. The Court disagrees. Defendant submitted a discovery request for access to
Plaintiff's Facebook account, and contends that the account "was essential to Defendants'
argument that the case deserved dismissal under Jeffreys v. City of New York." See Dkt. No. 70-3
at 20. Although Plaintiff's Facebook profile was not provided in its entirety upon Defendants'
first request, upon filing a motion to compel, it was provided in its entirety. Thus, the Court finds
that Plaintiff's counsel did not attempt to purposefully conceal evidence, and no prejudice resulted
to Defendant, as the complete profile was eventually produced.
The Court finds that, though limited, the evidence relied upon in this case could have led
Plaintiff's counsel to reasonably conclude that the facts supporting Plaintiff's claims might
ultimately have been established. Based on the foregoing, sanctions against Plaintiff's counsel are
not warranted. Alternatively, even if the Court were to find that counsel's conduct technically
violated Rule 11, the Court would nevertheless, in its discretion, decline to impose sanctions in
this case.
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C.

Motion for Sanctions against Plaintiff
In order for a district court to impose sanctions pursuant to its inherent power, it must find

that "(1) the challenged claim was without a colorable basis and (2) the claim was brought in bad
faith, i.e., motivated by improper purposes such as harassment or delay." Schlaifer Nance & Co.,
194 F.3d at 336 (citations omitted). "'[A] claim is entirely without color when it lacks any legal
or factual basis'[,]" whereas a colorable claim "'has some legal and factual support, considered in
light of the reasonable beliefs of the individual making the claim.'" Id. at 337 (quotations
omitted). In analyzing whether sanctions against a represented party are warranted, the relevant
inquiry is whether a reasonable plaintiff "could have concluded that the facts supporting the claim
might be established, not whether such facts actually had been established." Id. (quotation
omitted). "Finally, '[i]mposition of [financial] sanctions under a court's inherent powers requires a
specific finding that [a party] acted in bad faith.'" Truong v. Hung Thi Nguyen, 503 Fed. Appx.
34, 36 (2d Cir. 2012) (quoting Wolters Kluwer Fin. Servs., Inc. v. Scivantage, 564 F.3d 110, 114
(2d Cir. 2009)). "'A finding of bad faith, and a finding that conduct is without color or for an
improper purpose, must be supported by a high degree of specificity in the factual findings.'" Id.
(quotation omitted).
In order to establish a hostile work environment claim under Title VII, a plaintiff must
produce enough evidence to show that 'the workplace is permeated with discriminatory
intimidation, ridicule, and insult, that is sufficiently severe or pervasive to alter the conditions of
the victim's employment and create an abusive working environment.'" Gorzynski v. JetBlue
Airways Co., 596 F.3d 93, 102 (2d Cir. 2010) (quotation omitted). "A plaintiff must show not
only that she subjectively perceived the environment to be abusive, but also that the environment
was objectively hostile and abusive." Id. (citation omitted).
15

"To make out a prima facie case of retaliation under Title VII, a plaintiff must plausibly
allege that: "'(1) she was engaged in an activity protected under Title VII; (2) the employer was
aware of plaintiff's participation in the protected activity; (3) the employer took adverse action
against plaintiff; and (4) a causal connection existed between the plaintiff's protected activity and
the adverse action taken by the employer.'" Gordon v. Bd. of Educ., 232 F.3d 111, 116 (2d Cir.
2000) (quotation omitted).
Here, Defendant argues that Plaintiff's claims lack a colorable basis because Plaintiff "did
not have a reasonable belief that the facts she alleged actually happened." See Dkt. No. 70-3 at 9.
To support this claim, Defendant cites Plaintiff's "numerous contradictions, her record of praising
her job up until the moment she left, and the lack of a record of any mention of sexual harassment
before her extortionate email of February 9, 2012." Id. Defendant further reasons that the lack of
witnesses to any sexual harassment, combined with evidence that Plaintiff's coworkers witnessed
her "exposing herself and comparing a man's genitals to a 'mini-bic lighter' on the job," highlight
"just how unreasonable her complaint was." Id. Defendant also cites portions of this Court's
summary judgment decision:
As the court concluded in its opinion on summary judgment,
Plaintiff's claims are insufficient as a matter of law ... In outlining
her contradictions, the Court's decision tracks the necessary
findings for a lack of colorable basis. Compare, e.g., "utterly
devoid of a legal or factual basis," Schlaifer Nance, 194 F.3d at
337, with the Court's holding that Plaintiff's argument about her
email were "entirely without merit."
Lastly, Defendant asserts that "above all, [Plaintiff's] claims are not colorable because they were
coupled from the outset with an extortionate threat." Id.
In the present matter, the Court is unable to conclude that all of Plaintiff's claims entirely
lacked a colorable basis. Defendant correctly states that this Court found Plaintiff's arguments
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about her email as "entirely without merit." See Dkt. No. 70-3 at 9. However, Defendant is
effectively conflating this Court's view on Plaintiff's arguments regarding her email and the
Court's overall findings on Plaintiff's allegations in this lawsuit. The Court's view that Plaintiff's
arguments regarding her email were without merit does not equate to an overall finding that each
of her claims were entirely meritless. Further, that this Court ultimately found that Plaintiff's
claims failed as a matter of law does not automatically warrant the conclusion that Plaintiff's
claims also lacked a colorable basis. See Schlaifer Nance, 194 F.3d at 337 (holding that
"judgment as a matter of law against a claim is a necessary, but not a sufficient, condition for a
finding of a total lack of a colorable basis); see also Petrello v. White, No. CV 01-3082 DRH
AKT, 2011 WL 8198105 (E.D.N.Y. Mar. 3, 2006) (finding that a summary judgment holding
does not equate to a claim being meritless). Though deficient as a matter of law, Plaintiff's claims
did have some legal and factual support. For example, Plaintiff sufficiently pled a colorable basis
to state a claim under Title VII for a hostile work environment, even though Plaintiff was
eventually unable to withstand dismissal at summary judgment. Plaintiff's complaint contained
the following factual allegations:
(1) Defendant would walk up behind Plaintiff and rub her arm,
stroke her arm and slip her money;
(2) Defendant grabbed her arm and "asked her 'do you like to suck
it?'"
(3)She complained about her harassment to her supervisor, who
responded by sharing inappropriate jokes about her throughout the
workplace;
(4) Defendant touched her back, hand and arm and then would
make her bend over so he could watch;
(5) Defendant asked her to meet him in his bedroom where he felt
her stomach and left his pants unbuttoned;
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(6) When Plaintiff refused to engage in sex with Defendant,
Defendant called her derogatory names and offered her money;
(7) She was forced to hide under her desk or behind a filing cabinet
to avoid Defendant after his requests for dates; and
(8) Her experiences in the workplace caused emotional damage and
sickness.
See Dkt. No. 71 at 17-18. Thus, Plaintiff's factual allegations, supported by her deposition
testimony, and her overall belief that she was subject to a hostile work environment due to sexual
harassment and her gender, provided a colorable basis for her claim.
As to Plaintiff's claim of retaliation under Title VII, Plaintiff pled that she "complained
about her allegedly abusive treatment to her supervisor (protected activity and employer
knowledge), was subject to additional ridicule (adverse employment action), and that the ridicule
directly related to her complaint (causal connection)". Id. Defendant's main contentions, i.e. that
Plaintiff's allegations were contradictory, that she brought these claims as part and parcel with an
extortionate scheme, that her actions in praising the job to prospective employees indicated that
she never perceived her work environment to be abusive, and the fact that her male co-workers
testified in a manner indicating that Plaintiff participated in the very conduct she claims created
the hostile work environment does not provide a sufficient basis to conclude that Plaintiff did not
have a subjective belief in the facts underlying her pleading. Further, Plaintiff attempted, albeit
unsuccessfully, to contact and obtain written statements or evidence from other witnesses listed
support her claims. See Dkt. No. 71 at 27. Thus, the facts as they existed at the time Plaintiff
filed the complaint give rise to the inference that Plaintiff could have believed that additional
facts would be discovered in the discovery period to support Plaintiff's claims. See United Artists
Theatre Circuit, Inc. v. Sun Plaza Enter. Corp., 352 F. Supp. 2d 342, 355 (E.D.N.Y. 2005)
(holding that sanctions were not warranted where facts existing at the time the complaint was
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filed gave rise to a reasonable belief on the part of the plaintiff that additional facts could be
discovered to support the claims).
The Court finds that Plaintiff's allegations were not utterly devoid of a legal or factual
basis and, therefore, denies Defendant's motion for sanctions.
Even if the Court were to find that Plaintiff's claims lacked a colorable basis, which it does
not, the second requirement in imposing sanctions pursuant to a court's inherent power is that the
claim must be brought in bad faith, such that the actions taken by the plaintiff are "so completely
without merit as to require the conclusion that they must have been undertaken for some improper
purpose." See Schlaifer Nance, 194 F.3d at 338. The Second Circuit has "interpreted the bad
faith standard restrictively," and requires that the district court's factual findings of bad faith must
be "characterized by a high degree of specificity." See Eisemann v. Greene, 204 F.3d 393, 396
(2d Cir. 2000); see also Milltex Indus. Corp., 55 F.3d at 38 (2d Cir. 1995) (internal citations
omitted).
Defendant argues that Plaintiff's lawsuit was brought in bad faith and with an improper
purpose, and that when "blackmailing defendants with pictures did not work, she tried to make
money with a fraudulent lawsuit." See Dkt. No. 70-3 at 8. Although the email may have been
sent for an improper purpose, the Court cannot similarly conclude with the high degree of
specificity required that Plaintiff's lawsuit was brought in bad faith. Id. Rather, the record
indicates that, prior to commencing this lawsuit, Plaintiff sent an email including pictures of dirty
water samples, threatened Defendants with going "public" with the pictures if she did not receive
her employment and a settlement, and advised defendants that her lawyer was prepared to "sue for
way more than 5000 for the treatment I endured while employed at Nirvana for almost 5 years."
See Dkt. No. 38-2 at 2-3. The Court does not dispute the questionable nature of Plaintiff's
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motives in sending this email. Nevertheless, the Court also recognizes that, at no point after the
initial email was sent, or during the course of this lawsuit, did Plaintiff attempt to use the dirty
water samples or similar arguments in an attempt to gain settlement. Further, in Plaintiff's
response to Defendant's motion for summary judgment, Plaintiff "clarified that the water quality
issue had nothing to do with Plaintiff's sexual harassment and discrimination claims and that
Plaintiff did not intend to introduce anything related to water quality at trial." See Dkt. No. 71.
Based on the foregoing, and in light of the lack of any specific evidence indicating the
absence of Plaintiff's genuine belief in the validity of this action, the Court concludes that the
record cannot support an inference of bad faith on the part of Plaintiff.
Alternatively, even if the Court found that Plaintiff acted in bad faith and had no colorable
basis for her claims, the Court would decline to award monetary sanctions. As detailed in the
discovery provided in support and opposition to the motion for summary judgment, Plaintiff's
financial circumstances would make such an award inappropriate. See Truong, 503 Fed. Appx. at
36 (holding that the court must take into consideration the financial circumstances of the plaintiff
when determining if it should award the prevailing defendant attorney's fees) (quotation omitted).
IV. CONCLUSION
After carefully reviewing the entire record in this matter, the parties' submissions and the
applicable law, and for the above-stated reasons, the Court hereby
ORDERS that Defendant's letter motion seeking leave to file Plaintiff's certificate of
conviction (Dkt. No. 76) is GRANTED; and the Court further
ORDERS that Defendant's motion for sanctions (Dkt. No. 70) is DENIED; and the Court
further

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ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision
and Order on all parties in accordance with the Local Rules.
IT IS SO ORDERED.
Dated: July 28, 2015
Albany, New York

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