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
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 ...