The opinion of the court was delivered by: Glasser, District Judge.
Plaintiffs (hereinafter, the "ED-Plaintiffs"*fn1) bring this
action for monetary damages in excess of 158 million dollars,
alleging abuse of process, malicious prosecution, tortious
interference with contract, fraud, conversion, breach of
contract, civil racketeering under 18 U.S.C. § 1361 et seq., and
antitrust violations. Defendants Lowenfeld and Carmon move to
dismiss the Complaint as against them under Fed. R.Civ.P.
12(b)(2) and 12(b)(6). ED-Plaintiffs cross-move for an order
entering judgment by default against non-appearing defendants
Haaretz Daily Newspapers, Ltd., Publication Group, Inc., and
Maariv Modiin Publishing Co., Ltd. (collectively, the "Corporate
ED-Defendants").*fn2 For the reasons discussed below, the
Complaint is dismissed in its entirety, without consideration of
the merits of these motions.*fn3
These facts have been gleaned from the Complaint, and from the
parties' submissions in support of the motions before the Court.
Shmueli was the editor and owner of Israel Shelanu, a
Hebrew-language newspaper published in the U.S. between 1979 and
1998. Shmueli was also the principal of Bashe Inc., and Chani,
Inc., during that period. ED-Defendants Maariv and Haaretz own
and operate two of the largest daily newspapers published in
Israel. ED-Defendant Publication Group publishes Shalom L.A., a
Los Angles-based newspaper.
More than a year ago, in April 1998, the Corporate
ED-Defendants commenced an action in United States District Court
for the Southern District of New York, against Shmueli and Israel
Shelanu, and several others (referred to in that action, and
hereafter, as the "Chani SD-Defendants"*fn4), alleging
copyright infringement under 17 U.S.C. § 101 et seq., and related
state law claims.*fn5 The Corporate ED-Defendants here, who are
plaintiffs in the Southern District action, are represented in
that action by Julian Lowenfeld, who is also one of the
ED-Defendants here, as is Corporate ED-Defendants' Israeli
counsel, Chagai Carmon. The posture of that case is
relevant to this action, and so will be treated in some detail.
A. Procedural History of the Southern District Action*fn6
On May 18, 1998, Judge John G. Koeltl issued a preliminary
injunction prohibiting the copying or reprinting of materials
protected by copyright in the name of the Corporate
ED-Defendants. Haaretz Daily News, et al. v. Chani, Inc., et
al., 98 CV 2878 at Docket # 14-15. This injunction was
apparently granted upon the consent of the defendants in that
action, including Shmueli, and the Chani SD-Defendants.
(Lowenfeld Affirmation, Exh. 5, Letter from counsel to Shmueli to
Lowenfeld, dated May 14, 1998.) At the same time, Judge Koeltl
ordered the Corporate ED-Defendants (the plaintiffs, in that
action) to post a $70,000 bond, and referred the matter to
Magistrate Judge James C. Francis, IV, for further proceedings,
including discovery. Haaretz Daily News, 98 CV 2878 at Docket #
About a month later, counsel to Shmueli applied for, and was
granted, leave to withdraw as attorney for Shmueli and the Chani
SD-Defendants. Id. at Docket # 23. Two weeks after that,
Shmueli and others served an answer to the complaint, by their
new attorney Andrew Cooper. Id. at Docket # 25. With issue
joined, all parties in the action consented to proceed before
Magistrate Judge Francis.*fn7 Id. at Docket # 29.
On November 16, 1998, the Corporate ED-Defendants (acting, of
course, as SD-Plaintiffs) amended their complaint, adding Bashe
Inc., and Al Hamakom as SD-Defendants. Id. at Docket # 35. In
January 1999, Andrew Cooper applied for and was granted leave to
withdraw as attorney for Shmueli and the Chani SD-Defendants.
Id. at Docket # 38.
On March 22, 1999, Magistrate Judge Francis, having received no
answer from Shmueli to the amended complaint, issued an order
deeming that he had denied all material allegations in the
amended complaint. Id. at Docket # 43.*fn8 Finding that no
party had filed a timely jury demand, Magistrate Judge Francis
also ordered that the action would be tried as a bench trial.
This ruling provoked a response from Shmueli, proceeding pro
se at the time, in the form of a letter to the Magistrate Judge
Francis. In that letter, which is before the Court here as
Exhibit G in support of the ED-Plaintiffs' motion, Shmueli sought
leave to answer the amended complaint, and to assert
counterclaims, notwithstanding the March 22 order. In response to
Shmueli's letter-application, Magistrate Judge Francis issued an
order granting Shmueli leave to serve and file a motion seeking
leave to file an answer to the amended complaint, attaching the
proposed pleading. Id. at Docket # 44. Magistrate Judge Francis
ordered briefing on that motion to be complete by April 21, 1999,
and then added this monitory note:
Defendant Shmueli is cautioned that if his motion is
not well-founded in fact and law as required by Rule
11 of the Federal Rules of Civil Procedure, costs,
including attorneys' fees, will be assessed.
Shmueli Affirmation, Exh. G.
On April 5, 1999, Magistrate Judge Francis denied Shmueli leave
to file an
amended answer and counterclaims. Haaretz Daily News, 98 CV
2878 at Docket # 46 (copy attached as Exhibit 6 to Lowenfeld
Reply Mem. of Law).*fn9 Thereafter Shmueli, having engaged new
counsel (namely his attorney here, Jon Lefkowitz), made several
attempts to undo the consequences of that order. First, he sought
interlocutory review in the Second Circuit.*fn10 Then, he moved
Magistrate Judge Francis for reconsideration of the order. Id.
at Docket # 47, 49-50. Subsequently, according to docket entries
for June 9, 1999, he ...