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United Realty Advisors, LP v. Verschleiser

United States District Court, S.D. New York

June 3, 2015

UNITED REALTY ADVISORS, LP ET AL., Plaintiffs,
v.
ELI VERSCHLEISER ET AL., Defendants.

MEMORANDUM OPINION & ORDER

JOHN G. KOELTL, District Judge.

Defendants Eli Verschleiser, Raul Delforno, Ophir Pinhasi, and Alex Onica move for sanctions against plaintiff Jacob Frydman, an attorney proceeding pro se. The defendants seek sanctions pursuant to 28 U.S.C. § 1927. Frydman previously brought an order to show cause for a preliminary injunction together with a request for a temporary restraining order. After the defendants had opposed the numerous requests for relief, Frydman abandoned a majority of the provisions in the proposed order. The Court then issued a narrow temporary restraining order.

The defendants argue that Frydman's initial request for a broad temporary restraining order was without merit, brought in bad faith, and warrants sanctions. For the reasons stated below, the motion for sanctions pursuant to § 1927 is denied.

I.

Plaintiff Jacob Frydman filed the Original Complaint in October 2014. Frydman v. Verschleiser, No. 14cv8084 (S.D.N.Y. filed Oct. 7, 2014).[1] The Original Complaint asserted twenty-one causes of action, including claims for misappropriation of trade secrets, fraud, unfair competition, and violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. The Original Complaint identified Verschleiser, Delforno, Pinhasi, Onica, and others as defendants.

On December 30, 2014, Frydman brought an order to show cause for a temporary restraining against Verschleiser, Delforno, Pinhasi, Onica, and others. Frydman alleged that Verschleiser solicited Al Akerman to give Verschleiser confidential information concerning Frydman and various companies in which Frydman had an interest. Frydman Decl. ¶¶ 8-9. Akerman allegedly obtained this information while he was the chief compliance officer for Cabot Lodge, one of Frydman's companies. Frydman Decl. ¶ 8.

Frydman's proposed temporary restraining order was very broad. For example, Frydman requested that the Court prohibit the defendants from "making any contact with" with any prospective investor in United Realty Advisors, any person affiliated with any broker-deal, or any news organization "for the purpose, in whole or in part, of disclosing, sharing, publishing, or proffering any information about or relating to Frydman." Prop. Order to Show Cause ¶ 4.

Verschleiser, Delforno, Pinhasi and Onica opposed the proposed order on multiple grounds. The night before the hearing, Frydman limited his request for relief; he filed an amended proposed temporary restraining order that would have prohibited the defendants from using, publishing, or disclosing any propriety information.

After a hearing, the Court granted-in part-Frydman's request for a temporary restraining order. The Order prohibited the defendants from using or disclosing propriety or confidential documents obtained from Akerman. The Court also specified that "nothing in this Order shall bar any of the Opposing Parties from using any of the propriety information in connection with [a] pending state court litigation.... Any papers filed under seal in this action may be disclosed under seal in [the] state court action."

At the hearing, counsel for Verschleiser, Delforno, Pinhasi, and Onica orally requested that the Court impose sanctions on Frydman pursuant to § 1927. Tr. at 94-97. While the Court signed the limited temporary restraining order, and the parties eventually stipulated to a preliminary injunction, the Court did not rule on the request for sanctions under § 1927 pending the receipt of letter briefs from the parties.

II.

Section 1927 provides:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof 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.

There is no dispute that the initial proposed temporary restraining order was too broad. One of the provisions may have violated the First Amendment, see Bridge C.A.T. Scan Associates v. Technicare Corp., 710 F.2d 940, 946-47 (2d Cir. 1983), and another provision would have violated the Anti-Injunction Act. See BrandAid ...


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