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November 17, 2004.


The opinion of the court was delivered by: RONALD ELLIS, Magistrate Judge



Before the Court is a motion by defendants A. Alfred Taubman ("Taubman") and Diana D. Brooks ("Brooks") for sanctions pursuant to 28 U.S.C. § 1927 against class member Caleb B. Leys. Defendants allege that Leys has prosecuted this litigation in California and in this Court in a vexatious manner, and has pursued claims which are frivolous, and maintained in bad faith. They also allege that Leys has made misrepresentations to the Court and engaged in dilatory tactics. Defendants seek reimbursement for attorney's fees and costs in responding to Leys's actions. For the reasons which follow, I find that sanctions are appropriate, and direct that defendants submit an accounting of expenses and attorney's fees within ten days of this Order.


  In these consolidated cases, the plaintiff class brought suit for damages resulting from a pattern of collusive and anti-competitive practices by auction houses Sotheby's and Christie's between about 1993 and 2000. In late October 2000, this litigation culminated with preliminary entering of the Sotheby's Settlement Agreement (the "Settlement Agreement").*fn1 Leys is a member of the class encompassed in the Settlement Agreement. The agreement released defendants, including Taubman and Brooks "from any and all claims . . . based on any allegedly collusive activity . . . by, between, or among" Sotheby's and Christie's. Settlement Agreement at 12, ¶ 11.

  According to the terms of the Settlement Agreement, any class members who did not validly exclude themselves would release the Auction Houses and their owners from any and all claims and liability based on the activity alleged in the complaint in this case. Id. The Settlement Agreement contained explicit language requiring the parties to bring all subsequent actions related to the claims in the Southern District of New York, and entitling the Auction Houses to stay any action brought against them in another court. Id. at ¶ 16. Jurisdiction over the implementation and enforcement of the Settlement Agreement was also vested in this District. Id. at ¶ 17.

  On November 14, 2000, following preliminary approval of the settlement in this case, the Court endorsed a specific opt-out procedure for class members. Potischman Aff., Exh. 3. Under this procedure, class members were required to return a "Request for Exclusion" form by December 15, 2000. Id. at 2. This deadline was later extended to January 5, 2001. Id., Exh. 4 Class members who did not exclude themselves could otherwise file written objections by that same date. Id. at 2. While Leys concedes that he did not follow the established opt-out procedure, he contends that he opted out of the settlement by other means. On October 17, 2000, Leys had filed an individual lawsuit ("the First Leys Action") in California state court against Sotheby's, Christie's, Taubman, Brooks, and others. Potischman Aff., Exh. 6. The complaint contained essentially the same claims as those brought in this class action. Id. at 5-16. Three days after filing the complaint, Leys filed a summary judgment motion. In his motion, Leys admitted that he was a member of the class, but was not satisfied with the proposed settlement. In granting defendants' application to strike the summary judgment motion, the court found plaintiff had filed summary judgment papers prematurely, noting that they were filed before the defendants had been served with the complaint. In its order, the court also warned Leys that "any further frivolous filings would be sanctioned." Id., Exh. 9, at 2.

  In May 2001, the Court approved the Settlement Agreement. Id., Exh. 2. On November 15, 2002, Leys filed "the Second Leys Action" in California state court. Id., Exh. 11. That complaint alleged nearly identical claims as the First Leys Action, and again names Taubman and Brooks, along with other individual defendants. Id. In February 2003, Taubman and Brooks removed the Second Leys Action to the federal district court. Potischman Aff., Exh. 12. On or about February 6, 2003, defendants' counsel and Leys conferenced by telephone. Potischman Decl., at 6, ¶ 26. During the call, counsel told Leys that his suit was barred by the release in the Settlement Agreement, and asked him to dismiss his complaint or, in the alternative, grant defendants an extension of time to file a motion or answer the complaint. Id. Leys indicated that he would agree to an extension if the case were remanded to state court. Id.

  Leys justifies his refusal to agree to additional time by asserting that he "would have been inclined to grant an extension but for defense counsel's arrogant, boorish and condescending attitude." Plaintiff's Opposition to A. Alfred Taubman's Motion for Reimbursement of Attorneys' Fees and Costs ("Pl. Opp."), at 5. He claims that this "arrogance" led him to conclude that "he would be unable to amicably work with Defendants," because it "disallowed an atmosphere of cooperation between the sides." Id. Defendants retained local counsel in California and on February 7, 2003, filed a motion to transfer venue to the Southern District of New York or, in the alternative, to dismiss the case entirely. Potischman Aff., Exh. 12. They asserted that Leys was a member of the class bound by the terms of the Settlement Agreement, and that exclusive jurisdiction lay in the Southern District of New York over the claims in the Second Leys Action. Id at 4-7.

  Leys did not file a timely response to the motion. Nine days after the deadline to file opposition papers, and five days before a court ordered hearing on the motion, he filed an ex parte application to extend his time to file a response. Potischman Aff., Exh. 21. In his application, Leys stated that he had notified defendants' counsel of his ex parte request and that counsel had "not indicated any opposition thereto." Id. at 1. Elsewhere in the response, however, he stated that counsel for defendant Diana Brooks had "emphatically denied" his request for extension. Id. at 4.

  In the application for an extension, Leys listed a number of health problems which he claimed affected him, his mother and his daughter, and which he claimed prevented him from properly responding to the motion. Id. at 2. Despite these alleged health issues, Leys was able to file a motion to remand to state court (February 20), and a petition seeking to have the California Attorney General intervene in the action (March 5) during the same time frame. Potischman Aff., Exhs. 18, 20. The court granted the extension, and Leys filed an opposition brief on March 10, 2003. Id., Exh. 22. In this opposition, Leys first responded to defendants' position that he had not opted out of the class. He asserted that he had voluntarily dismissed the First Leys Action based upon the promise and understanding that the claim would be resolved completely within four to six months, but no later than the end of 2001. Id. at 2.

  Leys maintained that he sufficiently conveyed his desire to opt out of the class in this case. Id. at 3. Citing Rule 23(c) of the Federal Rules of Civil Procedure, he argued that:
In order to opt out from being a class member of a class action lawsuit, the request need not be explicit, but the important question is whether notice was communicated; a reasonable indication of the desire to opt out is sufficient, since flexibility is desirable in determining what constitutes an expression of a class member's desire to exclude himself, and any written evidence of the opt out should be sufficient.
  Id. He asserted that the filing of the First Leys Action before the January 5, 2001 deadline to seek exclusion was sufficient to notify all parties of his desire to opt out. Id. He further claimed that he had a written agreement memorializing his right to do so. Id.

  On February 25, 2003, Taubman and Brooks filed a motion to stay the California proceedings, and for other relief, including reimbursement for attorney's fees and costs under 28 U.S.C. § 1927. Potischman Aff., Exh. 16. Leys did not make a timely response to the motion. On March 12, 2003, Judge Kaplan granted the motion to stay and referred the request for reimbursement of attorney's fees and costs to the undersigned. Id., Exh. 15. In his order granting the motion, Judge Kaplan found that Leys is a member of the class, that he did not opt out, and that he is bound by the terms of the Settlement Agreement. Id. Although Leys defaulted on the motion for a stay, Judge Kaplan granted leave for him to file a motion for reconsideration of the order granting the stay. Id., Exh. 23. On April 16, 2003, Leys filed a motion seeking to set aside the stay and to continue with the California case. Id., Exh. 24. Two days after the motion to reconsider was filed, Taubman's counsel sent a letter urging Leys not to file the motion because it would not only be "untimely," but "frivolous and vexatious" as well. Id., Exh. 25. Shortly thereafter, counsel for Brooks sent a similar letter to Leys. Id., Exh. 26. Leys did not withdraw his papers, and defendants were forced to file an opposition. Id., Exh. 27.

  In his motion to set aside the stay, and in his opposition to the present motion for sanctions, Leys set forth additional arguments on the opt out issue. Relying on the case of In re Four Seasons Securities Law's Litig., 493 F.2d 1288 (10th Cir. 1974) ("In re Four Seasons"), he argued that "flexibility is desirable" when determining whether a class member has effectively communicated his desire to be excluded from the class. Id., Exh. 24 at 4; Pl. Opp. at 3. Moreover, he continued to maintain that there was an agreement to resolve his claims in four to six months, and that the ...

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