United States of America v. Elsass et al

Filing 86

OPINION AND ORDER granting 70 Motion to withdraw as attorney. Attorney David Freeman Axelrod terminated; denying 77 Motion to strike ; granting 81 Motion for leave to file. Signed by Magistrate Judge Norah McCann King on 11/02/11. (rew)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
vs.

Civil Action 2:10-CV-336
Judge Graham
Magistrate Judge King

TOBIAS H. ELSASS, et al.,
Defendants.

OPINION and ORDER
This

action

reflects efforts by the United States to enjoin

defendants’ promotion and pursuit of a theft loss tax program.

This

matter is now before the Court on defendants’ motion to amend or correct
their objection to the denial of their motion to compel, Doc. No. 68, on
plaintiff’s

motion to strike defendants’ reply, Doc. No. 77, on

defendants’ motion for leave to file instanter, Doc. No. 81, and on the
motion for leave to withdraw as counsel for defendants, Doc. No. 70.
On September 6, 2011, the undersigned denied defendants’ motion to
compel.

Opinion and Order, Doc. No. 62.

Defendants filed objections to

that denial, Doc. No. 66, as well as a motion to amend or correct their
objections, Doc. No. 68.

Defendants also filed a reply in support of

their objections, Doc. No. 76, in response to which the United States
filed a motion to strike, Doc. No. 77.

In response to plaintiff’s motion

to strike, defendants filed a motion for leave to file a reply instanter
or to strike the government’s opposition to defendants’ objections, Doc.
No. 81.

In their motions and memoranda relating to these motions, the

government complains that defendants “have made it their practice in this
case to disregard deadlines or procedures, whether imposed by the Local

Rules or the Federal Rules, where to do so would benefit them in some
respect, often resulting in substantial delay of the lawsuit.”

Motion

to Strike Reply Brief, Doc. No. 77, p. 2.
Although the progress of the litigation has been delayed, that delay
has been caused primarily by efforts – thus far unsuccessful – to
negotiate a settlement of this case.

Although the Court does not condone

efforts by any party to unnecessarily delay the progress of any case, the
Court is not persuaded that affording defendants a full opportunity to
pursue their objections to this Court’s prior order will result in such
undue delay.
objection,

Accordingly, defendants’ motion to amend or correct their

Doc.

No.

68,

and

defendants’

instanter, Doc. No. 81, are GRANTED.

motion

for

leave

to

file

The motion of the United States to

strike defendants’ reply, Doc. No. 77, is DENIED.
Counsel for defendants have filed a motion for leave to withdraw,
representing that defendants “have failed substantially to meet their
financial obligations to the movants, and have already imposed
unreasonable financial burden on them.”
70, p. 5.

Motion to Withdraw, Doc. No.

Defendant Elsass acknowledges that payment to defense counsel

is in arrears,1 but nevertheless opposes the motion and asks, inter alia,
that counsel be required to “remain as Counsel for all Defendants due to
the Greater Public good and interest in this case.”

Defendants [sic]

Response to Motion of Axelrod Laliberte to Withdrawal [sic], Doc. No. 78,
p. 4.
The Local Rules of this Court permit the withdrawal of trial counsel
upon a showing of “good cause, as defined by the Rules of Professional
Conduct . . .”

S.D. Ohio Civ. R. 83.4(c)(2).

1

See also S. D. Ohio Civ.

Defendant Elsass argues that defendants’ financial distress has been
caused by misconduct on the part of the United States.

2

R. 83.4(d)(“ . . . co-counsel who wish to withdraw must file a motion
that complies with subsection (c)(2) of this Rule.”) The Rules of
Professional Conduct permit a lawyer to withdraw from the representation
of a client where, inter alia,
(5)the client fails substantially to fulfill an
obligation, financial or otherwise, to the lawyer
regarding the lawyer’s services and has been given
reasonable warning that the lawyer will withdraw
unless the obligation is fulfilled; [or] (6) the
representation will result in an unreasonable
financial burden on the lawyer or has been rendered
unreasonably difficult by the client.
Ohio Rules of Professional Conduct, Rules 1.16(b)(5), (6).

Defense

counsel have established to this Court’s satisfaction that grant of the
motion to withdraw is warranted.
Court’s

estimation,

to

impose

It would be unreasonable, in this
on

defense

counsel

the

substantial

financial burden of defending against the claims asserted by the United
States.

Particularly is this so where, as here, substantial discovery

remains to be completed.

The Court will therefore grant the motion for

leave to withdraw.
The Court is not unmindful of the difficult position in which
defendants find themselves.

The Court will therefore grant defendants

thirty (30) days to effect the appearance of substitute counsel.
WHEREUPON, defendants’ motion to amend or correct their objection,
Doc. No. 68, and defendants’ motion for leave to file instanter, Doc. No.
81, are GRANTED.

The motion of the United States to strike defendants’

reply, Doc. No. 77, is DENIED. The motion for leave to withdraw as
counsel for defendants, Doc. No. 70, is GRANTED.

Defendants are granted

thirty (30) days to effect the appearance of counsel on their behalf, if

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they choose to do so.2
Proceedings in the case are STAYED during this period.

The Court

will conduct a status conference on December 15, 2011, at 1:30 p.m., to
establish a new pretrial schedule.

November 2, 2011

s/Norah McCann King
Norah McCann King
United States Magistrate Judge

2

As the Court previously noted, Order, Doc. No. 74, although defendant
Elsass, an individual, may represent himself in this action, the corporate
defendants may proceed only through the services of counsel licensed to
practice in this Court. Their failure to do so may result in their default.

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