the bank to avoid its failure. See id. at 452. The plaintiffs
then brought an action against the bank in federal court in New
York, making substantially the same allegations. Before filing
the complaint, their counsel in the U.S. action sent letters to
several Israeli government officials warning them of the
plaintiffs' intention to sue, and proposed settlement
discussions, citing the potential of the case to generate
negative publicity and discourage U.S. investment in Israel. See
id. at 453.
After dismissing the plaintiffs' complaint on forum non
conveniens grounds, the district court imposed sanctions of
$50,000 against their attorney under Rule 11, stating that
although it did not reach the merits of the complaint, it had
decided to award sanctions for what it viewed as the "manifestly
improper purpose which played a significant part in plaintiffs'
motivation for filing their complaint." Id. at 454-55.
Specifically, the court concluded, based in part on the
plaintiffs' letter to Israeli officials, that the filing of the
complaint in the New York litigation was designed to force the
withdrawal of the Israeli action by threatening the Israeli
government with negative publicity. See id. at 455.
The Second Circuit reversed, concluding that, because
violations of Rule 11 are determined with reference to the
objective soundness of the complaint, not the subjective intent
of the filer, a district court may not properly impose sanctions
for the filing of a nonfrivolous complaint simply because a
plaintiff's motive is not proper. See id. at 459. The Circuit
adopted the analysis of the Ninth Circuit in Townsend v. Holman
Consulting Corp., 929 F.2d 1358 (9th Cir. 1990), which noted
that because the enforcement of a plaintiff's private rights
through the filing of a non-frivolous complaint may benefit the
public through advancement of public policies, "it would be
counterproductive to use Rule 11 to penalize the assertion of
non-frivolous claims, even when the motives for asserting those
claims are not entirely pure." Sussman, 56 F.3d at 459 (citing
Townsend, 929 F.2d at 1362). The Second Circuit added that "[a]
party should not be penalized or deterred from seeking and
obtaining warranted judicial relief merely because one of his
multiple purposes in seeking that relief may have been improper."
Id. at 459.
Turning to the facts before it, the court concluded that mere
warnings by a party of its intention to file non-frivolous
claims, with predictions of consequent negative publicity, are
not improper. See id. Because the district court had not found
the plaintiffs' complaint to be frivolous, the Circuit concluded,
the award of sanctions under Rule 11 was improper.
Reasoning from Sussman, I conclude that counsel fees cannot
be awarded on Dr. Mikes's spirometry-related claims. That leaves
the question of relator's allegations of improper MRI referrals.
Dr. Mikes did not adduce any evidence in support of her improper
MRI referrals claim. As AFSCME, supra, indicates, the complete
absence of evidentiary support points to vexatiousness and
primary intent to harass. I therefore conclude that Dr. Mikes's
MRI-based claims were vexatious and brought with the primary
intent to harass defendants.
This does not end the matter, however. Although defendants can
receive an award of attorneys' fees expended in defense of the
MRI claim, it is not mandatory that they receive those fees.
Whether to make a fee award to a qualifying defendant, and in
what amount, is a matter of the district court's discretion. In
this regard, I can take into account, for example, the false
testimony given by Dr. Straus at trial that Dr. Mikes's proposal
for the development of a pulmonary clinic at Oxford was a
fabrication, that he never used the name "Oxford Medical Group"
until immediately before he incorporated the practice under that
name, and that he had no interest in any MRI facilities to which
the practice made referrals.
"[T]he district court is vested with broad discretion to
fashion an appropriate sanction" under § 3730(d)(4). Pentagen,
1996 WL 11299 at *13. See also 5A Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 1336 at 102 (2d ed.
1990) (noting that under Rule 11 "district courts have discretion
to tailor the sanction to the violation"). Dr. Straus's
testimonial lapses suggest that he does not deserve to recover
his share of the monies expended. Accordingly, I award the
defendants two-thirds of any attorneys' fees that they can
establish were attributable to the defense of the MRI claims. As
the records before me do not sufficiently distinguish between the
two claims asserted, I refer the matter to The Hon. George A.
Yanthis for a report and recommendation, to be delivered within
60 days. If the attorneys' records do not delineate between
services rendered for the two different claims, I authorize a
default fee award in the amount of five thousand dollars
($5,000.00), to be split between Dr. Ambinder and Dr. Friedman.
Defendants' application for an award of attorneys' fees and
expenses under 31 U.S.C. § 3730(d)(4) is granted with respect to
relator's claims for improper MRI referrals only, and denied with
respect to her remaining claims. Furthermore, defendants may
recover only two-thirds of their attorneys' fees expended in
connection with relator's MRI claims.
This constitutes the order and decision of the Court.