Opinion
C/A No. 7:08-cv-3830-GRA.
February 23, 2010
ORDER (Written Opinion)
This matter comes before the Court on the Motion of Defendants and their former attorneys in this action, Markham R. Leventhal, Irma Reboso Solares, and Julianna Thomas McCabe ("the Attorneys") to reconsider and vacate this Court's July 29, 2009, order revoking the pro hac vice status of the Attorneys ("Revocation Order"). For the reasons discussed herein, the Attorneys' Motion is denied.
Background
At a hearing on July 27, 2009, this Court revoked the pro hac vice status of the Attorneys due to their poor conduct and their failure to comply with the Local Rules. On July 29, 2009, this Court entered a written order explaining its decision in detail. ( See Revocation Order at 1-10, Dkt. No. 87.) On September 1, 2009, the Attorneys petitioned the U.S. Court of Appeals for the Fourth Circuit for a writ of mandamus regarding the revocation of their pro hac vice status. However, on October 9, 2009, the Fourth Circuit denied this request without issuing a written opinion.
A copy of the Revocation Order is attached.
In the meantime, in August 2009, Defendants proceeded with new defense counsel, and on February 11, 2010, the new defense counsel settled this case with Plaintiffs and the Court entered an order of dismissal. Subsequently, on February 22, 2010, the Attorneys filed the instant Motion requesting that this Court reconsider and vacate its Revocation Order.
Standard of Review
The Fourth Circuit has ruled that in cases where a party submits a motion to reconsider and does not refer to a specific Federal Rule of Civil Procedure, courts should consider that motion either a Rule 59(e) motion to alter or amend a judgment, or a Rule 60(b) motion for relief from a judgment or order. In re Burnley, 988 F.2d 1, 2-3 (4th Cir. 1992) (citing Sanders v. Clemco Indus., 862 F.2d 161, 168 (8th Cir. 1988)).
It is clear in this case that Rule 60(b) applies because the Motion is untimely under Rule 59(e). See, e.g., In re Burnley, 988 F.2d at 3. Under the version of Rule 59(e) in existence before December 1, 2009, a party needed to file a motion to alter or amend no later than ten days after entry of the judgment at issue. See Fed.R.Civ.P. 59(e) (amended Dec. 1, 2009). Under the current version of Rule 59(e), a party needs to file a motion to alter or amend no later than twenty-eight days after entry of the judgment at issue. See Fed.R.Civ.P. 59(e).
Here, the Attorneys filed their Motion more than six months after this Court entered its Revocation Order. In a similar case under the former limitations period, a South Carolina district court found that a party had missed the deadline under Rule 59(e) when it filed a motion to reconsider approximately twenty days after the court entered the interlocutory order at issue. See Ray v. Evercom Sys., Inc., No. 4:05-2904-RBH, 2006 WL 2475264, at *1 (D.S.C. Aug. 25, 2006). However, the Attorneys did file their Motion within the one-year limitations period that typically governs Rule 60(b). See Fed.R.Civ.P. 60(c)(1).
When making a motion under Rule 60(b), the party moving for relief "`must clearly establish the grounds therefor to the satisfaction of the district court,' . . . and such grounds `must be clearly substantiated by adequate proof.'" In re Burnley, 988 F.2d at 3 (internal citations omitted). The Fourth Circuit reviews a district court's decision to deny a motion for reconsideration in such circumstances under an abuse of discretion standard. Id.
Discussion
The district court's control over an attorney's pro hac vice status serves a critical function, especially in cases like these. A district court cannot afford to abrogate its authority to out-of-state attorneys who reside more than seven hundred miles from the courthouse. Attorneys cannot be allowed to fly in, commit violations of the district court's rules, and fly back to their home offices with complete impunity.Accordingly, the Attorneys' Motion fails to assert satisfactory grounds to compel this court to vacate or reconsider its Revocation Order. The Revocation Order did not put an end to the Attorneys' legal careers or even prevent the Attorneys from obtaining pro hac vice status in another South Carolina action. It merely outlined the Attorneys' actionable behavior.
A. South Carolina Rules Afford a District Court Discretion to Revoke Pro Hac Vice Status
The Attorneys appear to allege that the district court failed to follow the Rules of Disciplinary Enforcement ("RDE") in the Local Civil Rules when revoking their pro hac vice status. The Attorneys misread the District of South Carolina's Local Rules.
The Attorneys seem to argue that under the Local Rules, when revocation of pro hac vice admissions are involved, the district court must refer the matter to the Chief Judge for investigation, and, if warranted, adjudication by a three-judge panel. See D.S.C. R. 83.I. 08, Rule V(A), (E). However, the RDE Rule to which the Attorneys refer states that referral is only appropriate "[w]hen misconduct or allegations of misconduct . . . warrant discipline on the part of an attorney . . . and the applicable procedure is not otherwise mandated by these Rules. . . ." D.S.C. R. 83.I. 08, Rule V(A) (emphasis added). In cases involving revocation of pro hac vice status, the applicable Rule clearly states that a district court "may revoke admission under this Local Civil Rule at its discretion." D.S.C. R. 83.I. 05(B).
This discretion is necessary for the proper running of the Court. It is impractical to stop the case at the command of an attorney filing a motion as this would bog the courts down in battling such motions.
Although the Fourth Circuit has not discussed this issue at length, at least one unpublished Fourth Circuit order denied a writ of mandamus when a district judge revoked an attorney's pro hac vice status for failing to attend court on the day a trial was scheduled. In re Clark, 861 F.2d 263 (4th Cir. 1988). This holding is in line with common sense. To allow anyone facing revocation of their pro hac vice status to stall the courts through numerous internal hearings would likely accomplish the very delay that prompted many of these attorneys to face discipline in the first instance.
In arguing that this Court improperly revoked their pro hac vice status, the Attorneys go on at length to explain that contrary to the Court's assertions, they know the Local Rules. The Court's issue with the Attorneys was less about their lack of knowledge of the Local Rules, and more about their utter lack of compliance with those Rules. That the Attorneys knew the Rules and knowingly violated them only makes the Attorneys' failures more heinous.
B. The Court Afforded the Attorneys Adequate Due Process
Assuming, arguendo, that the revocation of an attorney's pro hac vice status gives rise to due process concerns, the Court afforded the Attorneys in this case adequate due process.
The Supreme Court has ruled that the right of an attorney to appear pro hac vice before an out-of-state court "does not fall among those interests protected by the due process clause of the Fourteenth Amendment." Leis v. Flynt, 439 U.S. 438, 438 (1979). However, the Fourth Circuit, in one unpublished opinion, implied in a footnote that a district court should impose revocation of pro hac vice status "after prior notice and an opportunity to be heard." In re Federal Sav. and Loan Ins. Corp., 852 F.2d 565 n. 4 (4th Cir. 1988).
Although the Fourth Circuit has never discussed the contours of the specific procedure a district court must afford attorneys before revoking their pro hac vice status, the Third Circuit has discussed this issue in greater detail. See Johnson v. Trueblood, 629 F.2d 302 (3d Cir. 1980). With regard to notice, the Third Circuit held that flexibility is key. Id. at 303. "We therefore leave the form of the notice to the discretion of the district court with the limitation that it adequately inform the attorney of the basis upon which revocation is sought." Id. at 304.
As to the opportunity to be heard, the Third Circuit held that a full-scale hearing is not appropriate. Id. As the court explained, there are different requirements for disciplining in-state attorneys versus out-of-state attorneys. "[T]he pro hac vice attorney's status as a member of the court is limited in time to one case, which places certain time constraints on the court." Id. Accordingly, the court merely required "that the attorney be given a meaningful opportunity to respond to identified charges." Id.
i. The Attorneys Received Adequate Notice
At a hearing on July 22, 2009, five days before the district court revoked the Attorneys' pro hac vice status, the undersigned adequately informed the Attorneys that their pro hac vice status was subject to revocation. (Tr. of Oral Argument, July 22, 2009, at 3-5, Dkt. No. 79.) The Court specifically took issue with the grounds upon which the Attorneys made their motions and with the voluminous and late filings made by the Attorneys. (See id. at 3-4.) See also Lasar v. Ford Motor Co., 399 F.3d 1101, 1113-114 (9th Cir. 2005) (holding that a district court could consider attorney's mistake in justifying revocation of pro hac vice status, even though court did not provide prior notice to attorney, because attorney himself was aware of his mistake).
Moreover, the Court informed the Attorneys that their pro hac vice admissions were not an absolute right and subject to revocation. (Tr. of Oral Argument, July 22, 2009, at 3.) The Court even allowed the Attorneys an opportunity to inquire about or to clarify any of the Court's grounds for potential revocation. After laying out the reasons for potential revocation, and warning Attorney Leventhal that he would be among the attorneys subject to pro hac vice revocation at the future hearing, the undersigned specifically asked, "All right, anything else?" (Id. at 4.) There was no response to this question.
ii. The Attorneys Received Adequate Opportunity to Respond
Although the circuit courts that have discussed revocation of pro hac vice and its due process implications seem to agree that a hearing is unnecessary, the Court nonetheless granted the Attorneys an on-the-record hearing regarding revocation of their pro hac vice status. At the hearing, the Court gave the Attorneys ample opportunity to respond to the Court's charges against them. The undersigned delivered a lengthy explanation of the Attorneys' failures, including their tardiness, noncompliance with the Local Rules, and frivolous motions. (Tr. of Oral Argument, July 27, 2009, at 7-11, Dkt. No. 90.) At that point, the Court heard from the Attorneys and the Attorneys' counsel, Mr. Beattie B. Ashmore, before revoking the Attorneys' pro hac vice status. (Id. at 20-23.) The Attorneys and their counsel were given a meaningful opportunity to respond to identified charges.
Conclusion
After a thorough review of the record, this Court finds that its prior decision was and is correct as a matter of law. See Cross v. Bragg, 329 Fed. App's 443, 452 (4th Cir. 2009) (affirming district court's denial of reconsideration motion because moving parties did not show the "exceptional circumstances" contemplated under Rule 60(b)). The Court's Revocation Order explained the basis for its findings at length. ( See Revocation Order at 3-10.)
The Attorneys may take issue with some of the Court's rulings, but they fail to make the proper showing that there was insufficient evidence in the record to support the Court's findings. The Attorneys also fail to understand that no single violation or no single act of bad conduct prompted the district court to revoke the Attorneys' pro hac vice status, but as outlined in the Revocation Order, it was the combined effect of the Attorneys' improper conduct and disregard for the Local Rules. The Court appropriately revoked the pro hac vice status of the Attorneys. Consequently, this Court affirms its Revocation Order and denies the Attorneys' Motion.
IT IS THEREFORE ORDERED that the Motion to Reconsider and Vacate this Court's July 29, 2009 Order, filed by Defendants and their attorneys, Markham R. Leventhal, Irma Reboso Solares, and Julianna Thomas McCabe, is DENIED.
IT IS SO ORDERED.
This matter is before the Court to review the pro hac vice status of Irma Reboso Solares, Julianna Thomas McCabe, and Markham R. Leventhal. These three attorney's are members of the law firm Jorden Burt LLP, and members of the Florida Bar. After conducting a hearing on this matter, the Court revokes the pro hac vice status for these attorneys.
The United States Supreme Court has long recognized that the Fourteenth Amendment does not provide an out-of-state attorney the right to practice in a particular jurisdiction. See Leis v. Flynt, 439 U.S. 438, 99 S.Ct. 698 (1979). Such a policy is expressed in the District of South Carolina local rules which provide that "[t]he Court may revoke admission under this Local Civil Rule at its discretion." 83.I.05 (B).
After a review of the record, the Court finds numerous grounds exist to revoke counsel's pro hac vice status in this case. First, the Court finds that the defendants' motion for recusal is inappropriate, dilatory and without a valid basis. Nothing presented in that motion even remotely demonstrates bias against the defendants. First, the Court's investigation into the Arkansas settlement matter was appropriate. The proposed award of 3.5 million dollars in attorney's fees and the recovery of forty cents on the dollar capped at $15,000 for class members justifies this inquiry. The fact that class action certification was rejected by Federal District Judge Susan Weber Wright and re-filed shortly thereafter in a state court divesting the federal court of jurisdiction made an inquiry into this settlement necessary to ensure that the interests of absentee class members were protected. In addition, this settlement was brought into question by the plaintiffs and was one of the issues specifically before the Court during the July 22, 2009 hearing. The assertion that it was inappropriate for the Court to examine the validity of the plaintiff's argument is simply absurd.
Expedited certification proceedings were clearly not designed to benefit the plaintiffs, but instead to drive this otherwise stagnant litigation. In fact, the Court specifically reminded the plaintiffs that they did not represent the people of South Carolina, but instead only their individual clients. This expedited schedule did not harm the defendants in any way.
Finally, the commentary regarding Judge Susan Weber Wright who denied the defendant's class settlement in no way prejudiced the defendants. Judge Wright had previously denied class certification in a case to which the defendants were a party. See Pipes v. Life Investors Ins. Co. of America, 254 F.R.D. 544 (E.D. Ark. 2008). When the parties in Runyon refiled their class action settlement they chose to avoid her courtroom and file their multi-million dollar nationwide class action settlement in an Arkansas state court. No explanation was offered for this unusual procedure. Also, during the proceeding, the Court expressly acknowledged the fact that Judge Wright was not at issue in this case. Tr. 5:5-20 (July 13, 2009). Finally, none of the comments made by this Court relate to this case. Instead these comments expressed strong professional disagreement with Judge Wright's handling of the proceedings involving former President Clinton and the eighteen month incarceration of Susan McDougal, a former business partner of the President who refused to testify before a grand jury. The Court finds that the Motion to Recuse was completely disrespectful, without merit, dilatory and based on groundless accusations. See S.C. Dist. Ct. Local R. 7.09 (stating "[w]here the Court finds that a motion is frivolous or filed for delay, sanctions may be imposed against the party or counsel filing such motion.").
The Court also finds that counsel does not know the local rules. The defendants were given until 9 a.m. on July 21, 2009 to file their response to the plaintiffs motion for class certification. At 7:43 a.m. on July 21, 2009, a motion was filed requesting leave to file pages in excess of the thirty-five page limit established by the local rules. S.C. Dist. Ct. Local R. 7.05(B)(1). This motion was subsequently denied. Such a last minute filing demonstrates a lack of knowledge of the local rules. A reply of appropriate length was not filed until well after the deadline. The Court has read and will consider this filing, however, it takes notice of the fact that it was late. The Court also notes that the defendants failed to discuss their motions with opposing counsel in violation of Rule 7.02. Had the defendants practiced this simple act of civility it is entirely possible that many of the problems in this case could have been avoided.
The Court also notes that many of the filings and arguments asserted by counsel are not offered in good faith, and appear to conflict with South Carolina's doctrine of judicial estoppel. "Judicial estoppel" precludes one from adopting position that conflicts with one previously taken in the same or related litigation. Cothran v. Brown, 350 S.C. 352, 566 S.E.2d 548 (Ct. App. 2002). As the defendants are attempting to convince the Court that nationwide certification is proper in Runyon, they are also attempting to convince the Court that a state wide class certification is not proper in this case. As one encompasses the other to a significant degree, this is improper and inconsistent. Though the Court acknowledges, that there are elements of Federal Rule of Civil Procedure 23 which are reasonably debatable and case specific, such as numerosity and typicality, the Court finds that many of the arguments asserted by the defendants are made in bad faith and are in direct conflict. For example, the defendants' argument that a class cannot be defined without individualized discovery is seemingly in opposition to their attempt to file for a nationwide class. This is also true with respect to the commonality. The defendants have repeatedly defended their nationwide class action, yet also assert that "commonality is lacking when a purported common question is subject to varying state laws." Def. Resp. in Opp'n to Pl's Am. Mot. for Class Certification, 21 (July 21, 2009). The defendants are arguing on both sides of the same issue. Such inconsistent pleadings are improper and typical of the dilatory tactics used by law firms specializing in "trouble spot" jurisdictions.
The online attorney profiles for Ms. McCabe and Mr. Leventhal note that they specialize in "trouble spot" jurisdictions including Florida, Mississippi, Alabama, and West Virginia. Jorden Burt, Attorney Profile of Markham R. Leventhal, http://www.jordenusa.com/attorney-profile-51.html (last accessed July 29, 2009) (attached as exhibit 1); Jorden Burt, Attorney Profile of Julianna Thomas McCabe, http://www.jordenburt.com/attorney-profile-79.html (last accessed July 29, 2009) (attached as exhibit 2).
Additionally, the Court finds that the defendants' Emergency Motion to Vacate July 14, 2009 Scheduling Order, to Continue Class Certification Hearing, to Establish Class Discovery Period, and to Enter Supplemental Class Certification Briefing Schedule was not submitted in good faith. First, as a common sense observation, filing a nine page claim that due process rights have been violated because of an inadequate time to prepare is ridiculous when a party not only filed a motion on the matter, but filed a motion that greatly exceeded the maximum page limits allowed by the local rules. In addition to the other filings, the defendants filed a twenty-two page motion for recusal. Thus, the defendants were able to research write and file a total of eighty-seven pages in the time period allowed by the Court. The defendants bear no burden of producing proof of class certification, so the slight shortening of their response period will not result in any prejudice. See Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 321 (4th Cir. 2006) (noting "it is not the defendant who bears the burden of showing that the proposed class does not comply with Rule 23, but that it is the plaintiff who bears the burden of showing that the class does comply with Rule 23."). Finally, the defendants are in possession of the names and insurance policies at issue and had already gone through a nationwide class certification hearing in the Arkansas settlement. If any party was prejudiced by the expedited schedule, it was the plaintiffs because they bear the burden of showing the Court that they meet the standards set forth in Rule 23.
The court hereby revokes the pro hac vice status for the attorneys admitted for this case because of the disappointing actions taken by counsel to prolong litigation. The Court notes that these filings case are in reaction to what the defendants wrongfully perceived as a potentially adverse decision.
THEREFORE, based on the foregoing the pro hac vice status of Irma Reboso Solares, Julianna Thomas McCabe, and Markham R. Leventhal is hereby REVOKED.
IT IS SO ORDERED.
Markham R. Leventhal
Partner
Florida, Washington, D.C. Email: ml@jordenusa.com Phone: 305.347.6905
Fax: 305.372.9928
Markham R. Leventhal is a litigation partner at Jorden Burt LLP with a national practice focusing on the defense of financial institutions and business interests in complex federal and state litigation. Mr. Leventhal is frequently called upon to defend national and state class actions and other high exposure cases involving allegations of fraud, inadequate disclosure, breach of contract, breach of fiduciary duty, deceptive trade practices, false advertising, violations of RICO, TILA, ERISA, antitrust statutes, regulatory statutes, and state consumer protection laws. His litigation experience extends to securities litigation, unfair competition, intellectual property issues, infringement actions, arbitration, and federal and state court appeals.
Mr. Leventhal has litigated in federal and state courts across the United States, and has defended over 150 class actions. He has served as lead or national coordinating counsel in jurisdictions including New York, New Jersey, Florida, Alabama, Arkansas, California, Georgia, Illinois, Mississippi, New Mexico, North Carolina, South Carolina, Rhode Island, West Virginia, Texas and other states. He is a specialist in civil procedure and legal strategy and has special expertise managing complex and high risk litigation in "trouble spot" jurisdictions, including punitive damage and bad faith lawsuits in Florida, Mississippi, Alabama, West Virginia, and other venues.
Mr. Leventhal is a veteran appellate practitioner known for his legal writing and technical skills. He has served as lead counsel in appellate matters before the U.S. Supreme Court, the U.S. Courts of Appeal for the Fourth, Fifth, Tenth, and Eleventh Circuits, and state appellate courts throughout the country. Mr. Leventhal is the chair of the firm's National Trial practice team.
Speeches and Publications
• Speaker: "Developments in Life Insurance Class Action Litigation," National Alliance of Life Companies, Spring Conference, Rancho Mirage, CA (April 2005)
• Speaker: "Emerging Trends in Class Actions, Bad Faith and Market Conduct Examination," ABA Mid-Winter Meeting, Tort Trial Insurance Practice Section, Phoenix, AZ (January 2005)
• Speaker: "Class Actions: Developments in Life Insurance And Annuity Litigation," ALI-ABA Conference on Life Insurance Company Products (November 2002)
• Speaker: "Litigation Technology in the Courtroom," ALI-ABA Conference on Life and Health Insurance Litigation (May 2000)
• Author: "Class Actions: Fundamentals of Certification Analysis," in Florida Bar Journal (May 1998)
• Contributing author: Chapter 2, "Preemption," in the HANDBOOK ON ERISA LITIGATION (Aspen Law Business)
• Author: "Civil Conspiracy and Aiding-Abetting: Discussing the Structure of the Theories and Related Principles of Legal Causation," 14 SETON HALL LAW REVIEW 627 (1984)
Julianna Thomas McCabe
Partner
Florida Email: jt@jordenusa.com Phone: 305.347.6870
Fax: 305.372.9928
Julianna Thomas McCabe is a Partner in the Firm's Miami office. Ms. McCabe is a litigation attorney with a national practice focusing on the representation of the financial services industry in complex federal and state litigation, including class action defense, consumer fraud, ERISA litigation, securities litigation, commercial litigation, and contractual disputes. She frequently defends high stakes lawsuits in "trouble spot" jurisdictions, including punitive damage and bad faith lawsuits in Florida, Mississippi, West Virginia, California and other venues. She has prepared briefs before the U. S. Court of Appeals and various State Supreme Courts and intermediate appellate courts.
Ms. McCabe has successfully represented the Firm's clients at arbitration before the NASD, and she has extensive experience litigating the enforceability of contractual arbitration clauses under the Federal Arbitration Act. Ms. McCabe has also participated in numerous successful mediations, and has defended creditors' rights in consumer bankruptcy proceedings. As a trial attorney and appellate practitioner, Ms. McCabe is known for her legal writing, negotiating, and technical skills.
Representative Matters
• Adams v. Southern Farm Bureau Life Ins. Co., 493 F.3d 1276 (11th Cir. 2007), affirming injunction against class members to prevent collateral attack of class action settlement and relitigation of released claims in Mississippi state court.
• Adams v. Southern Farm Bureau Life Ins. Co., 417 F. Supp. 2d 1373 (M.D. Ga. 2006); obtained injunction to prevent class members from collaterally attacking multi-state class action settlement and from relitigating released claims.
• McLain v. Southern Farm Bureau Life Ins. Co.; mass action filed in Hinds County, Mississippi; successfully petitioned Mississippi Supreme Court for writ of mandamus; writ issued, directing random judicial assignments for severed plaintiffs in judge-shopping case.
• McCorkle v. Northwestern Mut. Life Ins. Co., 112 P.3d 838 (Idaho Ct. App. 2005), affirming summary judgment in favor of insurer on statute of limitations grounds, rejecting plaintiffs' discovery rule argument.
• Pipes v. Life Investors Ins. Co. of America, 254 F.R.D. 544 (E.D. Ark. 2008); obtained order denying class certification.
• Contributing Author: Chapter 3, Preemption, in the "Handbook on ERISA Litigation," Wolters Kluwer Law Business/Aspen Publishers (3d ed. 2007)
• Panelist: Mock Supreme Court Argument, "Silencing the Court: Judicial Impartiality v. Free Speech," ABA Annual Meeting, August 2006
• Co-Author: "Recent Developments in Credit Insurance Litigation: An Update", Practicing Law Institute, Corpoate Law and Practice Course Handbook Series, 1301 PLI/Corp. 379 (2002)
• Co-Author: "Operating in the Sub-Prime Market: Ancillary Products Issues", Practicing Law Institute, Corporate Law and Practice Course Handbook Series, 1241 PLI/Corp. 1047 (2001)
• Author: "Fifteen Years After Weintraub: Who Controls the Individual's Attorney-Client Privilege in Bankruptcy", 80 B.U. L. REV. 635 (2000)