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Natan Applebaum, et al v. National Westminster Bank

October 5, 2011

NATAN APPLEBAUM, ET AL., PLAINTIFFS,
v.
NATIONAL WESTMINSTER BANK, DEFENDANT.



The opinion of the court was delivered by: Marilyn D. GO United States Magistrate Judge

Go, United States Magistrate Judge:

ORDER

Plaintiffs bring this action against National Westminster Bank ("NatWest") for civil damages for knowingly providing material support or resources to to the Islamic Resistance Movement, commonly known as HAMAS, a foreign terrorist organization, in violation of 18 U.S.C. § 2339B and financing acts of terrorism in violation of 18 U.S.C. § 2339C. Plaintiffs seek an order imposing sanctions against NatWest's counsel, Jonathan Blackman, for his conduct at the deposition of NatWest witness Michael Hoseason held in connection with this and a related action, Weiss v. National Westminster Bank, 06-cv-4622 (DLI)(MDG).

BACKGROUND

Plaintiffs allege, inter alia, that NatWest maintained bank accounts in England for Interpal, the principal clearinghouse for funds raised throughout Europe and the Middle East on behalf of HAMAS. Plaintiffs further allege that NatWest transmitted and deposited millions of dollars on behalf of Interpal to agents of HAMAS and alleged terrorist organizations. Mr. Hoseason was the leader of NatWest's Money Laundering Suspicion Team from 1999 to 2003.

Plaintiffs contend that Mr. Blackman impeded their ability to conduct an orderly deposition of Mr. Hoseason by making speaking objections and engaging in disruptive conduct. Plaintiffs point to the fact that Mr. Blackman appears on 114 of the 141 pages of the deposition transcript, or 81% of the pages. Plaintiffs further argue that Mr. Blackmun made speaking objections which were deliberately designed to coach his witness and that he made insulting and unprofessional comments to opposing counsel. Such conduct by Mr. Blackman followed his accusations of racism leveled at other counsel at the depositions of two other NatWest witnesses earlier that week. Mr. Blackman counters that his conduct was proportional to the degree of improper questions posed by plaintiffs' counsel.

DISCUSSION

Plaintiffs seek sanctions under 28 U.S.C. § 1927 and Rule 30(d) of the Federal Rules of Civil Procedure. Section 1927 provides that "[a]ny attorney who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927. Courts in the Second Circuit have construed Section 1927 as requiring "a clear showing of bad faith on the part of the attorney." See Shafi v. British Airways, PLC, 83 F.3d 566, 571 (2d Cir. 1996); Phillips v. Mfrs. Hanover Trust Co., No. 92 Civ. 8527, 1994 U.S. Dist. LEXIS 3748, at *3-*4 (S.D.N.Y. March 29, 1994). A clear showing of bad faith can be established where an attorney's actions are "so completely without merit as to require the conclusion that they must have been undertaken for some improper purpose such as delay." Oliveri v. Thompson, 803 F.2d 1265, 1273 (2d Cir. 1986); see Revson v. Cinque & Cinque, 221 F.3d 71, 78 (2d Cir. 2000).

In the Second Circuit, courts "typically consider three factors: (1) the extent and pervasiveness of the interruptions, as evidenced by the number of times that the attorney appears on the transcript; (2) the character of the interruptions (e.g., whether they included personal attacks on opposing counsel, or were merely groundless objections); and (3) the effect of the attorney's conduct (e.g., whether the deposition was entirely destroyed or merely prolonged)." Sicurelli v. Jeneric/Pentron, Inc., No. 02 CV 4934, 2005 WL 3591701, at *3 (E.D.N.Y. Dec. 30, 2005).

As to the first factor, although Mr. Blackman appears on 81% of the pages of the deposition transcript, many of his statements were limited simply to objecting to the form of the question and advising the witness that he may answer. The extent of counsel's objections is less pervasive than of counsel in other cases where the court imposed sanctions under section 1927. Compare Morales v. Zondo, 204 F.R.D. 50, 54 (S.D.N.Y. 2001) (granting sanctions under section 1927 where counsel appeared on more than 85% of the pages of the deposition transcript with statements other than an objection as to form or a request to the court reporter to read back a question) and Unique Concepts, Inc., v. Brown, 115 F.R.D. 292, 293 (S.D.N.Y. 2003) (granting sanctions under section 1927 where counsel appeared on 91% of the transcript pages with statements other than an objection as to form) with Sicurelli, 2005 WL 3591701, at *4 (denying sanctions under section 1927 where counsel appeared on 76% and 67% of transcript pages with statements other than objections to form or requests to the court reporter to have a question read back); Phillips v. Manufacturers Hanover Trust Co., No. 92 CIV. 8527, 1994 WL 116078, at *3-*4 (S.D.N.Y. Mar. 29, 1994) (denying sanctions where counsel appeared on 60% of transcript pages with statements including objections to form).

Second, as to the character of the interruptions, plaintiffs point to a number of instances in which Mr. Blackman engaged in lengthy speeches rather than limiting himself to brief explanations of objections. They also complain about his statements criticizing the way the opposing counsel conducted the examination and his attempts to control the manner in which questions were asked, sometimes by making personal attacks on opposing counsel. Mr. Blackman counters that his conduct was justified because the questioning by plaintiffs' counsel was improper and abusive.

This Court agrees that Mr. Blackman sometimes made unduly lengthy objections. A number of these objections arose as a result of Mr. Blackman's intolerance of opposing counsel's practice of questioning Mr. Hoseason about the contents of a document without first showing him the document. In many instances, the witness was unable to answer without review of the document and Mr. Werbner persisted in this manner of questioning. However, there is no rule that a questioner must show a witness a document before asking a question pertaining to the contents of a document. At one point, Mr. Blackman took it upon himself to show the witness a document that related to a pending question. See Tr. at 16. In other instances, Mr. Blackman accused plaintiffs' counsel of posing deliberately misleading questions.

The following are just a few notable examples of Mr. Blackman's attempts to control the conduct of the deposition, beginning with Mr. Blackman's expressions of dissatisfaction because the witness was not shown a document.

Q. I will represent to you that -- strike that.

Mr. Blackman: Why don't you just show him the document so he doesn't have to accept your representations. You are looking at the document. Is this a game? Show him the document.

Q. Isn't it true that the amber color code used by NatWest was done where there was suspicion about the customer but wrongful money laundering conduct had not been proved.

Mr. Blackman: Objection to the form of the question. I am going to direct him not to answer when you start reading or purporting to read things to him that he does not have. Don't answer the question. He will show you the document if he wants to.

Q. Are you refusing to answer the question, Mr. Hoseason?

Mr. Blackman: Why don't you show him the document? Mr. Werbner, answer my question. I am going to show him the document. Do we have the document? Can we get it? I think it is really outrageous, not to mention a waste of time, to ask someone questions when you are reading from a document and you won't show it to him. I think that is really unfair.

Q. Will you answer the question?

Mr. Blackman: You can answer the question. What is the question? Don't assume anything he is telling you is true when he says to you "isn't it true that" because it is probably not.

Tr. at 15-16.

Mr. Blackman also made gratuitous speeches in expressing his dissatisfaction as to how ...


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