United States District Court, S.D. New York
May 21, 2004.
SECURITIES AND EXCHANGE COMMISSION, Plaintiff, -against- SAVE THE WORLD AIR, INC., et al., Defendants; SAVE THE WORLD AIR, INC., Cross-Claimant, -against- JEFFREY AEAN MUEEER, et al., Cross-Defendants
The opinion of the court was delivered by: FRANK MAAS, Magistrate Judge
REPORT AND RECOMMENDATION TO THE HONORABLE GEORGE B.
This securities fraud action has been pending for several years. In
June 2002, a Judgment of Permanent Injunction was entered on consent
against defendant Save the World Air, Inc. ("STWA"), and those acting in
concert with STWA, enjoining them from further securities law violations.
Thereafter, in July 2002, Your Honor entered a preliminary injunction
order, pursuant to which, as I understand it, the cross-defendants,
including Jeffrey Alan Muller and his brother Murray Miller, whose
correct name evidently is Morrie Muller (hereinafter "Morrie Muller"), were enjoined
from engaging in certain transactions involving STWA stock, and Jeffrey
A. Muller was enjoined from serving as an officer or director of STWA or
seeking to exercise influence or control, directly or indirectly, over
the affairs of STWA. Most, if not all, of the Muller defendants
apparently reside in Australia. Counsel has never appeared on their
On or about April 7, 2004, this action was referred to me to report and
recommend regarding several dispositive motions that had been filed pro
se by one or more of the cross-defendants. Thereafter, I held a telephone
conference on April 27, 2004, in an effort to determine the status of
this case and what precisely the issues referred to me were. Following
the conference, the parties kindly consented to my exercise of
jurisdiction pursuant to 28 U.S.C. § 636(c) for the limited purpose of
resolving the outstanding motions. During the conference, there was also
some discussion of the fact that STWA would soon be holding a
shareholder's meeting, which is presently scheduled to take place next
Monday, May 25, 2004.
Following the conference, I have received a host of faxes from several
of the cross-defendants raising issues related to the shareholder's
meeting. My Chambers has also received countless telephone calls from
them. Morrie Muller, who identifies himself in a recent letter as a
Justice of the Peace in Australia, wrote to complain that STWA's counsel
had agreed to discontinue the action as against him, but had never
followed through, thereby inhibiting his ability to participate in the
shareholder's meeting. Mr. Matthews, STWA's counsel, confirmed that there was an agreement
in principle to dismiss the Cross-Complaint against Morrie Muller,
subject to his execution of a general release and other required
paperwork. Accordingly, when the parties have finalized their paperwork,
if they have incorporated a § 636(c) consent within it, I will be
pleased to discontinue the action as between STWA and Morrie Muller, or,
if they have not, will forward it to you for execution. In that regard, I
note that Morrie Muller recently asked me to indicate whether he should
sign the paperwork that he had been sent. As Your Honor is aware, I
cannot possibly provide such advice to a litigant.
The other pressing issue in light of the upcoming shareholder's meeting
is the request of Jeffrey Muller (hereinafter, "Mr. Muller") that he be
permitted to attend in his capacity as a director of STWA. When Mr.
Muller first asked that the preliminary injunction be lifted so that he
could vote his shares, I issued a memorandum endorsement on May 13, 2004,
which noted that if the parties' prior § 636(c) consent was broad
enough to cover this request, I would not grant it because Mr. Muller was
the subject of bankruptcy proceedings in Australia and "the trustee in
bankruptcy, rather than Mr. Muller, controls the disputed shares." I also
indicated that Mr. Muller's conclusory assertions did not appear
sufficient to justify lifting the preliminary injunction. (See Docket No.
Since then, there have apparently been two further developments, First,
because it is unclear that the relief that he was requesting is within
the scope of the § 636(c) consent, Mr. Muller has been in touch with your Chambers seeking
the relief that I suggested was unwarranted. Second, I was advised
several hours ago that Your Honor was referring this and any related
issues to me to report and recommend. While I have not had sufficient
time to review all of the extensive paperwork in this case (indeed, I am
not even sure I have it all at the moment), my conclusion remains that
the submissions by Mr. Muller are insufficient to warrant the requested
relief from the preliminary injunction. Moreover, even if there was a
basis for such relief, Mr. Muller plainly has not presented it in a
manner which would satisfy the Federal Rules of Civil Procedure.
Finally, I note that Mr. Muller also seeks additional relief, including
the dismissal of the cross-complaint. These issues are presently before
the Court in connection with the dispositive motions that have been
referred and will be addressed in due course. In the interim, to the
extent that Mr. Muller has been wronged, he has not shown that money
damages could not make him whole. Accordingly, I recommend that his
recent requests for expedited relief be denied.
Notice of Procedure For Filing of Objections to this Report and
The parties are hereby directed that if they have any objections to
this Report and Recommendation, they must, within ten (10) days from
today, make them in writing, file them with the Clerk of the Court, and
send copies to the chambers of the Honorable George B. Daniels, United
States District Judge, at the United States Courthouse, 40 Centre Street, New York, N.Y. 10007, to the chambers of
the undersigned, at the United States Courthouse, 500 Pearl Street, New
York, N.Y. 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1);
Fed.R.Civ.P. 6(a), 6(e), 72(b). Any requests for an extension of time for
filing objections must be directed to Judge Daniels. Any failure to file
timely objections will result in a waiver of those objections for
purposes of appeal. See Thomas v. Am. 474 U.S. 140, (1985);
28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72(b).
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