grounds that the decision to award sanctions rested on
erroneous factual findings.
That motion, which was extensively briefed by David, resulted
in this court's 47 page November Opinion affirming the
appropriateness of a sanction award under either 28 U.S.C. § 1927
or, alternatively, under Rule 37 of the Federal Rules of
Civil Procedure. An award of $17,500 was made against David and
the David Law Offices under the former statute, jointly and
severally, upon the modified findings set forth in the November
Opinion.*fn1 The instant motion for reargument followed.
Supporting the motion are the Law Office's initial memorandum
of December 12, 1989, a 158-page supplemental memorandum filed
on January 19, 1990, and a further reply memorandum filed on
February 9, 1990.
Rule 3(j) of the Civil Rules of this court requires that a
movant set forth "concisely the matters or controlling
decisions which counsel believes the court has overlooked. . .
." David and David Law Offices have submitted rather extensive
papers review of which discloses no factual matters, previously
presented but overlooked by the court, that "might have
materially influenced the earlier decision." Caleb & Co. v.
E.I. DuPont De Nemours & Co., 624 F. Supp. 747, 748 (S.D.N Y
1985); see also Walpex Trading Co. v. Yacimientos Petroliferos
Fiscales Bolivanos, 1989 WL 67239, 1989 U.S.Dist. LEXIS 6587
(S.D.N.Y. 1989) (quoting Adams v. United States, 686 F. Supp. 417,
418 (S.D.N.Y. 1988)) ("only proper ground on which a party
may move to reargue an unambiguous order is that the court
overlooked `matters or controlling decisions' which, had they
been considered, might reasonably have altered the result
reached by the court.").
Movants do bring to the court's attention the December 5
decision of the Supreme Court in Marvel Entertainment, ___ U.S.
___, 110 S.Ct. 456, 107 L.Ed.2d 438 (1989) rendered one week
after the November Opinion. Although that decision addressed
only the issue of sanctions against a law firm awarded pursuant
to Rule 11 of the Federal Rules of Civil Procedure, it is
appropriate to consider its application to the law firm
sanctions award here in view of the November Opinion's partial
reliance upon the reasoning of the then-governing Second
Circuit opinion that Marvel Entertainment reversed. See
Calloway v. Marvel Entertainment Group, 854 F.2d 1452 (2d Cir.
1988), cited in November Opinion at 43.
Law Firm Sanctions Under 28 U.S.C. § 1927
28 U.S.C. § 1927 lacks the "requirement of individual
signature" to which the Supreme Court ascribed great
significance in holding firm sanctions unauthorized under Rule
11. Marvel Entertainment, 110 S.Ct. at 459 ("Just as the
requirement of signature is imposed upon the individual, we
think the recited import and consequences of signature run as
to him."). Nevertheless, the statute does speak to "[a]ny
attorney or other person admitted to conduct cases in any
court" who acts unreasonably and vexatiously to multiply a
proceeding, and provides that such attorney may be required "to
satisfy personally" the costs, expenses and attorneys' fees
imposed upon others as a consequence of such conduct. 28 U.S.C. § 1927.
The latter term, "personally," in particular might be thought
to militate against the use of 28 U.S.C. § 1927 to sanction a
law firm. However, once it is considered that the sanction
provision is targeted exclusively at attorney conduct, as
opposed to the actions of an irresponsible client, see, e.g.,
F.T.C. v. Alaska Land Leasing, Inc., 799 F.2d 507, 510 (9th
Cir. 1986) (reversing sanction award under § 1927 imposed
against nonattorney), the use of the term takes on a rather
distinctive meaning of ensuring that it is the attorney
personally (and not the party) who is taxed the costs of
satisfying the award the court has imposed to cover the
additional costs attributable to
the vexatious lawyering conduct. As the Seventh Circuit
The district court concluded that § 1927 does not
authorize ordering recovery of costs from a party,
but only from an attorney or otherwise admitted
representative of a party. We agree. In our opinion
the section . . . authorizes imposition of
otherwise allowable costs on counsel personally in
place of the party for whom he appeared where the
circumstances mentioned in the section have
1507 Corporation v. Henderson, 447 F.2d 540, 542 (7th Cir.
1971) (citing numerous cases as "consistent with the foregoing
construction of the section"); see also Chrysler Corp. v.
Lakeshore Commercial Finance Corp., 389 F. Supp. 1216, 1224
(E.D.Wisc. 1975) (declining to sanction counsel under provision
where no evidence that vexatious action "was prompted by
Chrysler's counsel rather than or without the consent of
Chrysler Corporation such that costs should be taxable as
against counsel personally rather than Chrysler.").
Moreover, the statutory provision's reference to any attorney
"or other person admitted to conduct cases" discloses an
intended focus of the legislation on the regulating of those
entities who "conduct cases," a statutory class or category
into which law firms naturally fall. It is not surprising then
that although no decision has been unearthed specifically
addressing the matter of law firm sanctionability under § 1927,
courts implicitly have upheld the practice where appropriate.
See Apex Oil v. Belcher Co. of New York, Inc., 855 F.2d 1009,
1020 (2d Cir. 1988) (affirming district court's award of § 1927
sanctions against large law firm); Calloway v. Marvel
Entertainment Group, 854 F.2d 1452 (2d Cir. 1988) (reversing,
on grounds unrelated to sanctioned entity's status as law
partnership, an award of sanctions under § 1927), rev'd on
other grounds sub nom. Pavelic & LeFlore v. Marvel
Entertainment Group, ___ U.S. ___, 110 S.Ct. 456, 107 L.Ed.2d
The language of § 1927, unlike the text of Rule 11, does not
therefore disfavor requiring a law firm that is "conduct[ing]
cases" in a court in a manner that multiplies the proceedings
unreasonably and vexatiously to "satisfy personally" the fees
and costs reasonably incurred "because of such conduct."
28 U.S.C. § 1927. Obviously, such law firm conduct must rise to
the "bad faith" standard that has been recognized to apply to §
1927 orders, see Apex Oil Co. v. Belcher, 855 F.2d at 1020
(citing Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir.
1986)), but as the Second Circuit must have understood in
upholding sanctions in Apex Oil, a law firm as much as an
individual attorney can conduct litigation, and do so in a
fashion manifesting bad faith.*fn2
For the reasons previously set forth in the November Opinion,
David Law Offices' conduct of the diversity jurisdiction
portion of this litigation manifested such bad faith as is
sanctionable under 28 U.S.C. § 1927. Nothing in Marvel
Entertainment Group persuades the court of the incorrectness of
that conclusion as a matter of law, nor of the conclusion that
David, the counsel of record for plaintiff until just short of
the end of this proceeding, the head of the law office that
bears his name and that employed or associated with the lawyers
working on this case for plaintiff, and, dispositively, an
active individual participant in the conduct of these
proceedings, has been properly sanctioned for bad faith conduct
that unreasonably and vexatiously multiplied the proceedings.
For the reasons stated above, the motion to reargue the
November Opinion is granted to consider the effect of
upon that prior ruling, and, upon such consideration, the
November Opinion shall stand.
It is so ordered.