# Petition for Writ of Certiorari — Rothman v. New York State Department of Transportation, 106 S. Ct. 593 (1985) (No. 85-483) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_0773%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1985 ## Text v pee se \ Supreme Court, U.S. 85-483 bey FILED i Sep ** 1985 n e Supreme Court of the United States * October Term, 1985, No. JESSEL ROTHMAN, P.C., Petitioner, —againsi— NEW YORK STATE DEPARTMENT - OF TRANSPORTATION, Respondent. Petition For A Writ of Certiorari to the United States Court of Appeals for the Second Circuit HENRY MARK HOLZER Attorney for Petitioner c/o Brooklyn Law School 256 Joralemon Street Brooklyn, New York 11201 (718) 780-7985 nA eta QUESTION PRESENTED Before a Court of Appeals can impose monetary sanctions against a party’s lawyer (pursuant to Roadway Express, Inc. v. Piper, 447 U.S. 752 (1980), Alveska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975), 28 U.S.C., § 1912, 28 U.S.C. § 1927 and/or F.R. App. P. 38), does the Fifth Amend- ment’s procedural due process requirement necessitate at least clear notice of the court’s intention to sanction the lawyer, and/ or bifurcation of consideration of the appeal’s merits and the proposed sanction, and/or an opportunity for the threatened lawyer to be relieved or to withdraw, and/or some measure of discovery, and/or an evidentiary hearing on genuinely disputed issues of material fact, and/or other procedural safeguards; and do the Sixth and/or Seventh Amendments require a separate trial- type proceeding? 'In the instant case, the United States Court of Appeals cited the five sources referred to above as the combined basis of its power to sanction the parties and their lawyers. As will be seen infra, it is not possible to ascertain from the court's opinion if all of these were actually relied on by the court to sanction the lawyers, or if only some of them were. Plainly, as will also be seen in:/ra, all five can not apply (e.g. Alyeska). a i PARTIES The Parties in the Court of Appeais were: In Re Cosmopolitan Aviation Corp., Debtor; Cosmpolitan Aviation Corp., Debtor Appellant; Flushing Savings Bank, Intervenor, Appelle Cross- Appellant; New York State Department of Transportation, Appellee, Appellant, Cross-Appellee; Jessel Rothman, P.C.., Petitioner here, was counsel to Flushing Savings Bank below. TABLE OF CONTENTS Page I NINN a on ei bbb scar caescercsccteecesseseence i PPC CLC coh sche hbd ckWSCCS Sc case as RSUS OCS RRS SOK GEN il RI TIO kw ca kc cc cece cc cceccnceccsesescesesenenss I a eae p ees ewan tad sav aeeaesnse l Constitutional, Statutory and Other ec Laken wen eens ecsceheees es ew ate l Se Ee rer er ree 3 Reasons For Granting the Writ... ........ccceceecceeeees 15 ee eae ek a 5k KARA Ss 0.00004 664 CRONE S REED 31 Appendices: “A” Summary of Argument from Petitioner's Brief in the Court of Appeals “B” Portion of Petition for Rehearing “C” Relevant Portion of Transcript of Oral Argument in Court Below “D” Opinion Below “E” Order Denying Rehearing “F” Conclusion of State’s Motion on Remand in District Court “G” News Clipping iV TABLE OF AUTHORITIES Cases Page Alyeska Pipeline Service Co. v. Wilderness Society G20 U.S. BED CIOS v5 oes sv ows oss oases ence vanes L ta 89 Armstrong v. Manzo 380 U.S. 545 (1965) .......... 19, 22, 23 Beli v. Bureon, 402 U.S. SSS CTO) oc cde ccc cccccesess 22, 23 In Re Bithoney, 486 F.2d 319 (Ist Cir. 1973) ..........-45- 27 In Re Buffalo, 390 U.S. 544, 550-551, 88 S.Ct. 1222, ben pe we BY ee Gl) eerreerpererer rer ererr rr ree 22 Board of Regents of State Colleges v. Roth, PR Et. ror errr Teer ery TTT Tree eT 19 Boddie v. Connecticut, 401 U.S. 371, 378, 91 S.Ct. 780, ge Blt eer errerr TTT rey Tiere ete 22 Bolling v. Sharpe, 347 U.S. 497 (1954)... 2... eee ee eee eee 26 Bradley v. Fisher, 80 U.S. (13 Wal.) 646 (1871) ............ 19 Ceasar World, Inc. v. Venus Lounge, Inc., S20 F.2d 269 (36 Cie. 1979) oun nvaccescnscssccsecccnses 16 Clarion Corp. v. American Home Products Corp., 494 F.2d 860 (7th Cir. 1974), cert. dend, 419 U.S. 870 (1974), reh. dend. 419 U.S. 1027 (1974) ....... 20. eee eee 15 In Re Cosmospolitan Aviation Corp. v. New York State Dept. of Transportation, 763 F.2d 507 (2d Cir. 1985) ...... l Douglas v. First Nat'l Realty Corp., 543 F.2d 894 CERES Cae, Fs 46 0e AN an kek 05 cc ban AD SESS bees ce xs 30 Flaherty v. Flaherty, 31 Cal. 3d 637, 646 P.2d 179, icfal@ Ce fi. rrereorrri vary errr ret Tore 27 annette ti sh Flouro Electric Corp. v. Branford Associates, Oe Tie ee GE Gs SPE S564 COAG G NK KO NSS bn 1k sad RRA 15 Fuentes v. Shevin, 407 U.S. 67 (1972) ................ 22, 23 Furbee v. Vantage Press, Inc., 464 F.2d 835 (D.C. Cir. ec PPE ee nee Os eT OE OE area 15 Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, PP Se IEE be Ses Wane ssei geben Sek ad ens Edn deen 22 Gerard v. Goins, 575 F.2d 160 (8th Cir. 1978) ............. 30 oes ¥. Coie, SID OS, Se Tiree os akc vnc cdkacnchen 19, 23 Griffin v. Griffin, 327 U.S. 220 (1946) .......0.c.eeeeeeeee 19 Hagerty v. Succession of Clement, 749 F.2d 217 ee er er ee Oe ne ere errr 25 Johnson v. Mississippi, 403 U.S. 212 (1971), 91 S.Ct. 1778 ...30 Londoner v. City and County of Denver, 210 U.S. 373, Pe ny I is 958 a can babe ns Rake Kade 22, 23 Malhiot v. Southern California Retail Clerks Union, Vege Bes. Le | Pere ere erry Troe ey 23 Mathews v. Eldridge, 424 U.S. 319 (1976) ....... 18, 19, 23, 24 Monk v. Roadway Express, Inc., 73 F.R.D. 411 (1977) ..... 16 3 Monroe v. N.L.R.B., 511 F.2d 611 (Sth Cir. 1975).......... 16 Morrissey v. Brewer, 408 U.S. 471 (1972) ........... 0000. 23 Mullane v. Central Hanover Bank and Tr. Co., Pe ec A KS Ba kk Wes kd or eas 19, 22 iia vi Muniz v. Hoffman, 422 U.S. 454 (1975)... 0.6. ce eee ee 30 | NLRB v. Lucy Ellen, 517 F.2d 551 (7th Cir. 1975) .......5. 27 Nemeroff v. Abelson, 620 F.2d 339 (2d Cir. 1980) ...... 27, 29 Northcross v. Board of Education, 489 F.2d 19 BOs GR. TOO ca cnc a Sac.n caee beach ns ha cdeesesaewest 15 Opp Cotton Mills, Inc. v. Administrator of Wage and Hour Division of the Dept. of Labor, SUS U.S, TAB CIOGT) osc scdccccccvenccseesectuedececses 22 Roadway Express, Inc. v. Piper, G47 U.S. 738 (EGER) oc cn ccccccceveccass i, 14, 16, 17, 25, 29 Skinner v. White, 505 F.2d 685 (Sth Cir. 1974)...........4. 30 Smoot v. Fox, 353 F.2d 830 (6th Cir. 1965), cert. dend sub nom., League of Women Voters v. Smooth, TOS UE Gee CE ok Sa cava bated uceeeeeecs see tateuds 29 ) Sniadach v. Family Finance Corp. of Bay View, FB RR S| EERO TST Tee rer CT eT TEE ee Tey 23 Stewart v. Sonneborn, 98 U.S. 187 (1879) .......... 2. eens 29 Talamini v. Allstate Ins. Co., 105 S.Ct. 1824 (1985)..... 18, 28 | Tatum v. Regents of University of Nebraska-Lincoln 103 S.Ct. 3084 (1983), 462 U.S. T1172... 6.00.0 eee 18, 27 U.S. v. Illinois Central R. Co., 291 U.S. 457, 54 S.Ct. GFE Fea 4 5 4k phe Ads WAAR O CEES AURA Mae Ci USS ekES 22 Wisconsin v. Constantino, 400 U.S. 433 (1971)...... 19, 22, 23 Statutes Oe SD Ga dase hccc Usd iin be\cenecetdbicakec tunnel 30 Se Se BOER bos Chak scenectVedsbecaseceatern i, 2, 13, 15 Be a ee vabendesscaaes S39 Se Fe F- ee ee ON 0h b nta dea ea Ka bcd sabes ehbackacweasens I ee Ee rere ror rT l Rules Tie UN Us OO 84 a0 cbehesnb ed bee causaceies i, 2, 13, 15, 16 Pi MS GP a SCC SNS CEC hOs vdnKeeebendseeauneeakeue 18 Fake Fe ee ee OO OP ns kv nn thoes basenaacsneuanceaes 26 Fa Re Ik Fined 064A a hae dew kee e ee bbe ch eenas 30 Constitutional Provisions ee eT ee a eeeeuee es 18, 19, 22, 26 SP PE We Si i ek ci wececLanacubew buen 29, 30 Se I, I a a ccc cecneae wines 29, 30 ee Vili Miscellaneous F.R. App. P. 38 advisory committee note, 43 F.R.D. 61, 155 (1967), reprinted in J. Moore, B. Ward and J. Lucas, Moores Federal Practice 238.01[02] SN, SUES S4ECA4SA Kan dSEUNER SE SOME EEAENGEESa OC ees 16 H.R. Rep. No. 1234, 96th Cong. 2d Sess. 8, reprinted in U.S. Code Cong. and Admin. News Re SS aie GandGewnkhnSONRnGws eee tbe iy esenees 17 Martineau, Frivolous Appeals: The Uncertain Federal Response 1984 Duke L.J. 845...... 15, 17, 18, 20, 21, 26, 27 S.J. Moore, J. Lucas and J. Wicker, Moores Federal Practice Par. 38.11[5] (2ed. 1980)...............08. 16, 29 Comment, Nemeroff v. Abelson, Bad Faith and Awards of Attorneys’ Fees, 128 U.Pa. L. Rev. 187.(1979)........... 29 ee FRO FOE BO FOI a ove ccwcccccseccancscccccess 28 Procedural Rights of Attorneys Facing Sanctions, 40 Rec. A.B. City N.Y. 313, May-June 1985 ............ 31 Code of Professional Responsibility, DR 1-102 (A)(4) and (5), 2-109 A)(2) and 7-I02(A)(5)............008. 23, 27 Other Law Review Articles Batista, Defending Yourself Against Sanctions, 9@ Eatimntion S46, Borie 1FE6 20s ccccccccesccccccvcsess 29 Burbank, Sanctions in Proposed Amendments to the Federal Rules of Civil Procedure: Questions About Power, Ti Hofetes L. Rev. 997 (19G3) ... cccncccnsececes 29 Curtin, Chairmans Corner: Sanctions, 10 Litigation News SRS oi i ae ee eae ben 29 Frank, On the Merits: Frivolous Suits Targeted. ee a ae A PA £4 4 eRe be daesnscecncucesss 29 Fruin, Conduct of Court Proceedings: When Lawvers Bend the Court Out of Shape, 21 Judges J. 14, Pee PE nuk aes Mabie kwh oe ne nendnbeséccndsncacss 29 Green, From Here to Attorneys Fees: Certainty, Efficiency, and Fairness in the Journey to the Appellate Courts, Se EE ing SET IE 0 os a o's 65.0 0:00 0ib-b'00 Vege oes 29 Hall, Attorneys Fees Against Parties and Attorneys, ap ae OO 6 wc kceuads eeua cacune ced 29 Hansken, The Federai Courts Authority to Assess Attorneys Fees Directly Against Counsel: Roadway Express, Inc. v. Piper, DePaul L. Rev. 66D (1ISS1) oc cccccscccccvces 29 Loth, Appealing the Frivolous Appeal, 56 Ohio St. Ais es WEEE, EUs OU TEs ca cbneetereseciaccans 29 Mallor, Punitive Attorneys Fees For Abuse of the Judicial System, 61 N.C.L. Rev. 613 (1983) ............. 29 McKirdy, 28 U.S.C. § 1927 — Counselor Beware, FE ee PUNE ds G56 50S Chr abe hicedeccnectescs 29 Meadows, Frivolous Lawsuit May Destroy Career of Attorney: ls There A Remedyv?, 17 U. Rich. L. Rev. GDECIGESD, oncik.c on dccceapots env duisenteaeesavesees ts 29 Middleton, Four Bars Join Battle Over Lawyers Rights, 9 B. Leader 30, Sept.-Oct. 1983.2... ecccccccccsvcceces 29 Ross, Sanctions to Enforce Jurisdictional Discovery: Constitutional and Prudential Limitations, 68 Va. 1. REV. FEE CAFR) obs cis ete eweeeeessb ce tstssees 29 Shaneyfelt, Warning to Overzealous Attorneys, TO Witamnatie 6.5. GOT CTR svc ccc wees ce rsdecsecess 29 Stevenson, Damages For Frivolous Appeals, 45 La. eet, | PO ree Perr err ery er ere 29 Sweeney, Attorney Liability For Malicious Prosecution: Nelson v. Miller, 46 Mo. L. Rev. 896 (1981) ............ 29 Umin, Making Abusive Lawyers Pay, 10 Litigation ND aa 6 vba hee tka ck eb ekeckdanns Sm aneesbeane 29 White, Attorney Malpractice: Problems Associated With Failure to Appeal, 31 Buffalo L. Rev. 583 (1982) ........ 29 Comment, Awards of Attorneys Fees Against Attorneys: Roadway Express, Inc. v. Piper, 60 B.U. L. Rev. 950 CIGIOT ob ody cocaunne es cv sabhs aeeden eee ras cb eV sess 29 Comment, Sanctions Against Defense Attorney: In Re Gonzalez, 69 Mass. L. Rev. 134 (1984) ........... 29 OPINION BELOW The opinion below (Appendix “D” hereto) is reported at 763 F.2d 507 (2d Cir., 1985), under the title: In Re Cosmopolitan Aviation Corp., Debtor, Cosmopolitan Aviation Corp., Debtor- Appellant, Flushing Savings Bank, Intervenor, Appellee Cross- Appellant, against New York State Department of Transporta- tion, Appellee, Appellant Cross-Appellee. Jessel Rothman, P.C., Petitioner here, was counsel to Flushing Savings Bank below and seeks Certiorari from this Court to review the Second Circuit’s assessment of monetary sanctions against Jessel Rothman, P.C. qua Flushing’s attorney. This Petition in no way involves the substantive merits of the appeal decided by the United States Court of Appeals for the Second Circuit in the above titled case. JURISDICTION The opinion/ order of the Court of Appeals was made and entered on May 24, 1985. A timely petition for rehearing was denied on June 27, 1985, and this Petition fora Writ of Certiorari has been filed within 90 days of that date. The jurisdiction of this Court is based on 28 U.S.C. § 1254(1). CONSTITUTIONAL, STATUTORY AND OTHER PROVISIONS INVOLVED The sole Constitutional provisions involved in this case are the due process clause of the Fifth Amendment and the jury trial guarantees of the Sixth and Seventh Amendments. Also involved are two federal statutes and one federal rule: Where a judgment is affirmed by the Supreme Court or a court of appeals, the court in its discretion may adjudge to the prevailing party just damages for his delay, and single or double costs. (28 U.S.C. § 1912). Any attorney ... admitted to conduct cases in any court of the United States ... 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). If a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee. (F.R. App. P. 38). STATEMENT OF THE CASE Jessel Rothman, P.C., a professional legal corporation of the State of New York (hereafter “Petitioner”), represented Flushing Savings Bank in the United States Court of Appeals for the Second Circuit. The case involved Flushing’s status asa lender, a defaulted lease and a bankruptcy proceeding.' The appeal was argued by an associate from Petitioner’s firm, Julian Kaplan, Esq., About half-way through Mr. Kaplan’s oral argument— even though no sanctions had been sought in the bankruptcy court, the district court or any of the three state courts, and the subject had not even arisen in those forums—a member of the Second Circuit panel interrupted with the then out-of-context observation that: “Let me tell you something. You know that your opponents have asked for an award under Section 1927 [of 28 U.S.C.]. That’s one of the issues in this case. Remember that.*? Mr. Kaplan made no response, and simply continued his argument on the merits. Next came the oral argument of an Assistant Attorney General of the State of New York, Barrie Goldstein, Esq. When she finished, a now-unidentified member of the panel raised the question of attorney’s fees and the following ensued: THE COURT: What about attorney’s fees? 'Annexed hereto as Appendices “A” and “B,” respectively, in order to provide this Court with soune sense of what the appeal concerned (although this Petition has nothing to do with the merits of Petitioner's appeal to the Second Circuit on behalf of Flushing Savings Bank) are the summary of argument from Petitioner's brief-in-chief in the court of appeals and a portion of his unsuccess- ful petition for rehearing there. ?Annexed hereto as Appendix “C” is the title page of the oral argument trans- cript, page 19 on which the unidentified member of the panel made the state- ment quoted above, and the “conclusion” portion of Respondent's brief in the court of appeals wherein a fleeting reference is made to the Attorney General's request for attorneys’ fees pursuant only to 28 U.S.C. § 1927. | 4 That is what I was going to ask. Talking about that, there has been so much hocus pocus about who repre- sents whom here. The sheet that the courtroom deputy gave me says Bruce Karp for Cosmopolitan wishes to give all of his time to the intervenor, Jessel Rothman, for Flushing, who I understand is out of town. Your name is what, sir? MR. KAPLAN: Julian Kaplan. | identified myself as an attorney for Mr. Rothman’s office. THE COURT: Yes, you did. | am not critical of that. I am just saying it’s a ticklish situation here. Your name is wnat? MR. KAPLAN: Julian Kaplan. I am an associate of the firm. Cosmopolitan submitted a one-page statement that they are relying on our brief— THE COURT: I understand— (inaudible)—but the State says any attorney who so— (inaudible)—and I just want to make sure that this panel is aware of the attorneys who you claim are involved in prolonging this litigation. We have two here before us this morning, but | am not sure their firms represented Cosmopolitan and Flushing all the way through from the beginning. MS. GOLDSTEIN: For the pertinent point in time, Your Honor, yes, that is true. Indeed, Your Honor, | would like the Court to be aware that $117,500 has been set aside by the District Court for the potential awards of attorney’s fees as well. THE COURT: Did you move for attorney’s fees in the District Court? MS. GOLDSTEIN: No, Your Honor. I had to come up here first because they appealed the orders. I am prepared to move— (People talking at once overlapping, inaudible) THE COURT: Should we remand for an award of attorney’s fees against Mr. Rothman and Cosmo- politan or—we—isn'‘t that a matter for trial? MS. GOLDSTEIN: I would expect that, according to this Court’s decisions on fees, and I am familiar with the Court’s decisions, but not as familiar as | am with the case law of the Court right now. I would suggest that we perhaps may need at least some proof to be submitted. My hourly proof, I have been keeping contemporaneous records of that. I would be more than happy to do research and submit a letter memorandum to the Court on that. What we seek right now is the vacatur of this Court’s December 20th stay. THE COURT: Well, we are going to reserve decision, but before we do, I understand that this Court issued a stay pending argument of this appeal; is that correct? MS. GOLDSTEIN: That’s correct, on December 20th, Your Honor. THE COURT: Well, that stay is hereby vacated. MS. GOLDSTEIN: Thank you, Your Honor. THE COURT: We will reserve decision. MR. KAPLAN: May | be heard in reply on one brief point? THE COURT: To what do you want to reply? MR. KAPLAN: The statement that was just made with regards to attorney’s fees and Flushing possession is in, quote, “the entire”—(inaudible) THE COURT: I will give you one minute. MR. KAPLAN: I would just like to point out as a matter of fact, and this is undeniable, Flushing has only been a party to this proceeding for a grand total of 40 days. During those 46 days, we prepared an appeal, put together an 800-page Joint Appendix, had it printed and filed within ten days, and— THE COURT: Counsel, are you saying that Flushing hasn't been the moving party behind this entire seven- year episode? MR. KAPLAN: I am saying that absolutely, Your Honor, and that is a contradiction of Cosmopolitan’s conduct to Flushing that puts my client and my firm in jeopardy. In fact, Your Honor— THE COURT: Let me ask you a question. The principals in Cosmopolitan, since the default began, have been paying money on this debt to Flushing? MR. KAPLAN: In 1981, personal guarantors, who were sued by Flushing in the State Court and against whom a $600,000 judgment was obtained on personal guaranty, paid payments toward that judgment. That is It. THE COURT: So Flushing’s interest in keeping Cosmopolitan on the airport is a financial interest in getting payment on their debt, and some of that is being paid out of revenues—of the fixed-base operator? MR. KAPLAN: No, Your Honor, it was paid personally out of pockets of certain individual guarantors when we obtained a judgment on the personal guaranty. Flushing never appeared, did not appear or bring any motions in the District Court. It only appeared on two occasions as a creditor— THE COURT: Those guarantors, were they guaran- tors for the full amount of the debt? MR. KAPLAN: Yes. THE COURT: Well, then why do you care about that? MR. KAPLAN: Because they are completely finan- cially incapable of paying. They made a few $6,000 payments, I think four or five. In 1981— THE COURT: What is happening to the revenues of the fixed-base operator right now? MR. KAPLAN: I don't know. Your Honor, again, | can't answer for Cosmopolitan. THE COURT: Why are you trying to keep them on the airport? MR. KAPLAN: I am trying to resurrect a lease because as long as they are in Chapter 11, even if they are liquidated, if that lease is resurrected, a plan can be formed or the lease can be sold and some of the creditors will get paid. THE COURT: What difference does it make if it is resurrected, whether or not they are in possession or not? MR. KAPLAN: Your Honor— THE COURT: If the lease legally can be resurrected, whether they were on the airport or off the airport, it is not going to affect them, is it? MR. KAPLAN: I think it becomes moot once possession is delivered to MTA. THE COURT: While litigation is pending over whether or not the lease is— MR. KAPLAN: Your Honor has just vacated a stay. That means they can put a new tenant in there to- morrow, and I think that a State court— THE COURT: And a new tenant would be aware that litigation is pending if litigation was pending, would they not? MR. KAPLAN: A State court would be— THE COURT: Would yor put a lis pendens on a landlord? MR. KAPLAN: Sure. THE COURT: I don’t think you would call it that— MR. KAPLAN: I don’t know if I can put a lis pendens on, based upon this proceeding. Perhaps I can or perhaps I can't. However, Your Honor, all | am saying is that DOT could have obtained everything from normal State court procedures. lad Phd st If a State court would have found it to give Cosmo- - politan the right to redeem, fine. If they would have been found to waive those rights, fine. That’s a determi- nation the State Court should have made at District Court. It went beyond its jurisdiction in stepping on the State Court’s jurisdiction. THE COURT: Who was Mr. Rothman representing when he appeared, moved for a stay in this Court in December? MR. KAPLAN: Flushing Savings Bank as an inter- venor. December 14, 1984, we were granted leave to intervene. That following Tuesday, the [8th, it was Cosmopolitan’s motion for a stay in which Flushing joined. Flushing was never a party to any of the Federal court proceedings except as a creditor, other than after its intervention. I ask the Court to take cognizance of that fact, even if it finds us to be delaying and, it’s beena grand total of 40 days, that Flushing certainly moved with dispatch in meeting this Court’s expedited appeal schedule. THE COURT: Reserve decision. The Court of Appeals gave petitioner no other notice or information concerning the subject of sanctions. Indeed, the court itself would later, in its opinion (D-13), note that it only “...directed the parties to file supplemental briefs addressing both the extent of our power to award sanctions against Cosmopolitan, Flushing and their attorneys for bad faith litigation and the best method for calculating the amount.” Nothing was said about the possibility or desireability of separating the substantive appeal from the potential sanctions. Petitioner, apparently not realizing that he was at that moment wearing two hats (Flushing’s counsel and a potential co-sanctionee), made no effort to withdraw as Flushing’s lawyer. 10 Indeed, when following oral argument, Respondent and Petitioner submitted papers to the court addressing the question of attorney's fees, Petitioner's entire approach was as Flushing’s lawyer, and in no way at all as a potential “target” of the court's wrath.3 Although, in his affidavit opposing the imposition of attorney's fees, Jessel Rothman, Esq., stated that: “If and when the Court identifies any remarks which I made [on the previous application for a stay] that could conceivably serve as the basis for sanctions, I respectfully request that I be given the opportunity to offer a fulland complete response to the Court,™ no hearing of any kind was ever held about the possible sanctions. In its opinion/ order dated May 24, 1985,° the Court of Appeals disposed of the substantive case before it. At the same time, and for the first time, it made the following damning statements: @ “the frivolous and vexatious character of the appeal brought by Cosmopolitan and Flushing warrants the imposition of sanctions ... against them as well as their attorneys” (D-3); @ the case was “... complicated by the combined machinations of Cosmopolitan and Flushing” (D-4); @ there was “... truly remarkable bad faith evi- denced by Cosmopolitan and Flushing throughout this litigation” (D-4); 3Respondent submitted an affidavit by Barrie Goldstein, Esq., dated February 13, 1985, “in response to the request made by the Court at the oral argument on January 23, 1985 to set forth the State's damages caused by appellants’ frivolous and vexatious appeal.” In response thereto, Petitioner submitted a “Supplemental Brief” and an affidavit of Jessel Rothman, Esq., dated March 13, 1985. 4See page 2 of Mr. Rothman’s affidavit of March 13, 1985. 5Appendix “D” hereto. @ “During the course of these proceedings, Cos- mopolitan, Flushing and their attorneys have continually mischaracterized facts, prior proceedings and the law” (D-4); @ the bankruptcy court had “... characterized the entire [bankruptcy] proceeding as an abuse of process...” (D-10); @ “Expressing grave misgivings as to Cosmo- politan’s standing to appeal and a strong suspicion of bad faith, [the district judge] ... stayed the bankruptcy court order” (D-11); @ The district judge’s order required a bond from Cosmopolitan against sanctions which “might later be ‘assessed against Cosmopolitan and its attorneys pursuant to 28 U.S.C. § 1927 upon a determination that Cosmopolitan has engaged in dilitary or vexatious litigct‘on in this matter.’ ” (D-11); @ the district judge “again expressed [his] ... un- easiness with the proceedings generally, noting that the action appeared to be a misuse of the bankruptcy court.” (D-11); @ “...we believe that sanctions against Cosmo- politan, Flushing and their attorneys are appropriate.” (D-13); @ “Flushing’s second argument is tantamount to a direct affront.” (D-17); @ “... the stay would not have been granted had Cosmopolitan and particularly Flushing not com- pletely obfuscated the factual and legal issues. The unnecessary complexity created by Flushing, Cosmo- politan and their attorneys, augmented by mischarac- terizations and omissions, misled the panel that granted 12 the stay. We will not permit the wrongdoers to profit from their contemptible conduct. The December 20 stay cannot buffer them from the consequences of their bad faith.” (D-19); ® One of Flushing’s claims is “dubious at best” and one of its hopes for relief faces “mindboggling odds.” (D-19), @ Flushing’s characterization of a state proceeding as for nonpayment “is pure fabrication” (D-20); @ “Flushing’s redemption claim is completely frivolous” and another argument is “bizarre.” (D-21); @ Flushing’s due process argument is “{bJased on fabrication and fantasy.” (D-22); @ “the appeal brought by Cosmopolitan and Flushing is entirely frivolous. It can only have been brought for the purpose of delay. Cosmopolitan, Flushing and their attorneys have acted vexatiously and in bad faith. The attorneys representing Cosmopolitan and Flushing have unreasonably multiplied the pro- ceedings in this case and are guilty of willful abuse of process. The parties and their attorneys should be penalized for unnecessarily. wasting our time and resources and the state should be compensated for having been put to the expense of answering these wholly frivolous appeals. *** This Court has been used, as were the bankruptcy court and the district court, to frustrate the rights of the State...” (D-23); In consequence of the foregoing, the court of appeals assessed “double cos.s against Cosmopolitan and Flushing” and “reasonable attorneys’ fees against Cosmopolitan, Flushing and their attorneys.” (D-23); 13 On remand, the district court was instructed only to assess the amount of the State's attorneys’ fees “in this appeal and to assess that amount jointly and severally against Flushing and _ its attorneys and jointly and severally against Cosmopolitan and its attorneys.” (D-23) “...the case is remanded... for the calculation of sanctions.” (D24)° In imposing these overall monetary sanctions the court of appeals relied on five separate sources, making no differentiation between the bases for sanctions against the parties and sanctions against their lawyers: Our power to award sanctions in this case derives from severai sources. Fed. R. App. P. 38 permits us in our discretion to award damages and doubie costs for the prosecution of a frivolous appeal. The advisory committee note to the rule explains that damages in such a case should be awarded “as a matter of justice to the appellee and as . penalty against appellant. Similarly, 28 U.S.C. 1912 (1982) gives us the discretion to award toa prevailing party damages for delay and double costs. Under 28 U.S.C. § 1927 (1982), “[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.” Finally, where a losing litigant has acted vexatiously or in bad faith, it is within our inherent powers to award attorneys’ fees. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59 (1975). And if we find willful abuse of process, we may exercise our inherent power to assess ‘Petitioner understood, and now understands, that the terms of the remand call upon the district court only to perform a mechanical function, not to provide any procedural due process. 14 attorneys’ fees against counsel. Roadway Express, Inc. v. Piper, 447 U.S. 752, 766 (1980). Seeking an opportunity to answer the specific charges made and resolved against him for the first time in the court of appeals opinion, Petitioner filed a timely petition for rehearing. It contended that there was no evidence before the court of appeals that Flushing’s appeal was unwarranted, it attempted to demon- strate that the appeal was meritorious, and it asserted that “a rehearing is required in the interests of justice in order that Jessel Rothman, P.C. may have an opportunity to show how its argument and efforts on behalf of Flushing were apparently misunderstood.” On June 27, 1985, rehearing was unanimously denied.’ Petitioner now faces an assessment of attorneys’ fees which could go as high as $361,260.55.8 *By the time of Petitioner's petition for rehearing, Flushing had obtained new counsel. They, too, sought rehearing, and expressly requested “a hearing to review all evidence on the question of improper conduct and to determine which, if any, misrepresentations or mischaracterizations have been made in any papers filed in this proceeding, and to apportion as between Flushing and its former counsel the responsibility for paying such attorneys’ fees...” 7See Appendix “E” annexed hereto. 8See Appendix “F” hereto, the “Conclusion” of Respondent's motion currently pending on remand in the district court concerning the actual amount of attorneys’ fees being sought. 15 REASONS FOR GRANTING THE WRIT Introduction Before setting forth Petitioner’s reasons why this Court should grant the Petition for a Writ of Certiorari—the importance of the constitutional questions involved, and the implications of those questions for the general administration of justice in the federal courts—it is necessary to make several preliminary points. Although the court of appeals cited five separate sources as bases for assessing sanctions against Petitioner, two of them seem plainly to be inapplicable. A/yeska did not involve sanctions against a lawyer, and thus we consider that case as having no bearing on this case. So, too, is 28 U.S.C. § 1912 inapplicable. First, there is some doubt about whether the section can be used against a lawyer;? Second, 28 U.S.C. § 1912 is limited to damages for “delay,” and the court of appeals charged Petitioner of much more than that. Third, 28 U.S.C. § 1912 only applies when there is an “affirmance.” Here, the court of appeals dismissed and reversed. In its imposition of sanctions against Petitioner the court of appeals also relied on F.R. App. P. 38, a rule silent on its face concerning against whom damages can be assessed. Indeed, most Rule 38 awards are imposed against the opposing party not against opposing counsel. (See, e.g., Furbee v. Vantage Press, Inc., 464 F.2d 835 (D.C. Cir., 1972); Fluoro Electric Corp. v. Branford Associates, 489 F.2d 320 (2 Cir., 1973); Northcross v. Board of Education, 489 F.2d 19 (6 Cir., 1973); cert. den. 416 U.S. 962; Clarion Corp. v. American Home Products Corp., 494 F.2d 860 (7 Cir., 1974), cert. den. 419 U.S. 870, Reh. den. 419 U.S. 1027; %See Robert J. Martineau, “Frivolous Appeals: The Uncertain Federal Response,” 1984 Duke Law Journal 845, 868 (1984), hereafter cited as “Martineau.” 16 Monroe v. NLRB, 511 F.2d 611 (5 Cir., 1975); Caesar World, Inc. v. Venus Lounge, Inc., 520 F.2d 269 (3 Cir., 1975) ). Moreoever, the Advisory Committee note to Rule 38 cites as the reason for the rule “justice to the appellee and as a penalty against the appellant. ""® So it would appear that the court of appeals was probably in error in utilizing F.R. App. P. 38 as a basis for sanctioning Petitioner gua lawyer.'' That left only Roadway and 28 U.S.C. § 1927. This Court’s holding in Roadway—that there is inherent power in a federal court to impose attorneys fees against oppc »ing counsel who have abused the processes of the courts, if there is a showing of bad faith after adequate notice and an opportunity to be heard—is limited in two ways which have important meaning for the instant case. First, Roadway involved sanctions imposed by a district court, and is thus not directly controlling precedent on the question of whether a court of appeals possesses similar power. Second, much of the procedural due process that Petitioner asks this Court to consider requiring the courts of appeals to provide was provided to the sanctioned lawyers by the district court in Roadway. (Monk v. Roadway Express, Inc., 73 F.R.D. 411 (1977) ). Thus, that much of Roadway which opines that “{I]ike other sanctions, attorney’s fees certainly should not be assessed lightly or without fair notice and an opportunity fora hearing on the record” (447 U.S. at 767) is, strictly speaking, only dicta. 'OF_.R. App. P. 38 advisory committee note, reprinted in J. Moore, B. Ward & J. Lucas, Moore’s Federal Practice (2d ed. 1973), at 238.01 [Z] and in U.S.CS. Court Rules (Lawyers Co-Op, 1983). ''Even if the court of appeals was correct in invoicing F.R. App. P. 38, however, that would not change the question presented here. Indeed, if F.R. App. P. 38 were arguably yet an additional ground for a court of appeals to impose monetary sanctions against lawyers, there would be that much more ofa reason to grant the instant Petition. 17 Perhaps that is why, until the Second Circuit sanctioned Petitioner in this case, “[nJotwithstanding the clear holding in Roadway Express, only once has a federal appeals court relied upon the case as authority for the imposition of a sanction against an attorney for filing a frivolous appeal.”!? Instead, the courts rely on 28 U.S.C., § 1927, which Congress amended after Roadway was decided in order: to include attorney fees among the items that could be assessed against counsel pursuant to that section. [foot- note omitted] The report of the conference committee managers, specifically addressing the issue of what procedures should be followed in imposing a sanction under the section stated: “The managers intend that judges applying section 1927 will safeguard the rights of an attorney who may be held in violation of the section. Before sanctioning an attorney under section 1927, the court is to afford the attorney a// appropriate protections of due process available under the law. (H.R. Rep. No. 1234, 96th Cong. 2d Sess. 8, reprinted in 1980 U.S. Code Cong. & Ad News 2781, 2783).!° Although, unfortunately for Petitioner, the conference com- mittee report failed to spell out what were “all appropriate protections of due process available under the law,” the legislators did know ali of the procedural due process protection that the district court had provided, and that this Court had tacitly approved, in Roadway. With only that background— Roadway’ procedures in the district court and what this Court said in its Roadway opinion, '2Martineau, at 862. '3Martineau, at 874. 18 and the text of the post-Roadway 28 U.S.C. § 1927 amendment, together with that amendment’s scant but clear legislative history—when this Court approaches the instant Petition it reads a precedential clean slate.'4 The Important Questions of Procedural Due Process |. The Mathews v. Eldridge Principle This Court’s decision in Mathews v. Eldridge, 424 U.S. 319 (1976)—involving the Fifth Amendment’s due process clause, which is invoked in this case—seems to have become the bedrock of all procedural due process inquiries in its enunciation of the principle that “(t]he fundamental requirement of due process is the opportunity [following fair notice] to be heard ‘at a meaningful time and in a meaningful manner.’ ” (424 U.S. at 333). As to that “meaningful time”: “A claim to a predeprivation hearing as a matter of constitutional right rests on the proposition that full relief cannot be obtained ata postdeprivation hearing.” (424 U.S. at 333). '*As to oral hearings in sanction situations, Professor Martineau (at 876, fn 177) reports that “{iJn all of the cases in which federal courts of appeals have considered sanctions for frivolous appeals, the necessity for an oral hearing has never been raised. When the United States Supreme Court in 1983 imposed for the first time in many years a monetary sanction for the taking of a frivolous appeal, it did so without hearing oral argument on the issue. See Tatum v. Regents, 103 S. Ct. 3084 (1983).” But see also Talamini v. Allstate Ins. Co., 105 S. Ct. 1824 (1985). There, Allstate sought costs and fees from the appellant, pursuant to this Court's Rule 49, for having to respond to a frivolous appeal. Several things are of interest. First, this Court “afforded appellant the oppor- tunity to respond” (105 S. Ct. 1825). Second, the Chief Justice and Justices Rehnquist and O'Connor would have sanctioned appellant’s attorney, while still recognizing that “freedom of access to the courts is indeed a cherished value” (105 S. Ct. at 1825). Third, Justices Stevens, Brennan, Marshall and Blackmun declined to impose sanctions, in large part because of the strong value of open access to the courts. They went so far as to perceive a “strong presumption ... against the imposition of sanctions for invoking the processes of the law” (105 S. Ct. at 1828). 19 Over the years, regardless of whether the interest involved was characterized as “liberty” or “property” (and we view the sanctions imposed on, and derivately visited on, Petitioner as affecting both (see Goss v. Lopez, 419 U.S. 565 (1975) and Board of Regents v. Roth, 408 U.S. 564 (1972)), this Court’s application of the Mathews principle (even pre-Mathews: itself) has fallen into two categories: cases dealing with the “notice” aspect, and others concerned with “opportunity to be heard.” Notice. Perhaps this Court’s best modern sum-up of the consti- tutional necessity for fair notice is found in Armstrong v. Manzo, 380 U.S. 545 (1965):'5 “An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. [citing cases]” Mullane v. Central Hanover Bank & Tr. Co., 339 U.S. 306, 314. Questions frequently arise as to the adequacy of a particular form of notice in a particular case. [citing cases] But as to the basic requirement of notice itself there can be no doubt....'¢ \S Armstrong, a State case, involved the due process clause of the Fourteenth Amendment. However, for procedural due process purposes we draw no distinction between that amendment and the Fifth Ar ndment involved here. '6See also Bradley v. Fisher, 80 U.S. (13 Wall.) 646 (1871); Griffin v. Griffin, 327 U.S. 220 (1946); and Wisconsin v. Constantineau, 400 U.S. 433, 437 (1971), where this Court held that: “[wJhere a person’s good name, reputation, honor or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential.” We shall discuss infra the potential impact of the court of appeals, sanctions on Petitioner’s “good name, reputation, honor and integrity.” 20 In light of these procedural due process notice requirements, there is an extremely important constitutional question presented by the approach taken by the Second Circuit in its sanctions against Petitioner in this case, and taken by other circuits in similar cases: is the lawyer’s intent and/or conduct the measure of the appeal’s merit, or the measure of the sanction? Unfortunately, although many lawyers are being sanctioned and those sanctions are monetarily and professionally quite costly, and although the im- portant constitutional value of fair notice is at stake, no clear answer has been given by the courts of appeals or by this Court. Professor Martineau explains the problem thusly: The courts of appeals have often confused two distinct issues. The first issue is whether an appeal should be classified as frivolous because of its lack of merit. [footnote omitted] The second issue is whether, given that an appeal is frivolous on its merits, the conduct of the appellant or the attorney is such that a sanction should be imposed on one or both. [footnote omitted] Often courts determine that an appeal is frivolous by examining the conduct of the appellant or attorney, rather than by looking at the merits of the appeal. [foot- note omitted] This conduct is then used as the basis for determining the necessity for the sanction and the type to be imposed. [footnote omitted] This approach causes the courts to vacillate between objective and subjective standards and obscures the extent to which the intent of the appellant or the attorney determines whether an appeal is frivolous. Even though an appeal does have some merit, it may still be frivolous if the appellant’s conduct indicates that his primary purpose is to delay enforcement of the judg- ment, to cause the appellee to incur unnecessary expense, to be vexatious, or if the conduct otherwise demonstrates bad faith by abuse of the judicial process. There is no case in which a court has found that an _— 4 ® ¢ Xx . 21 appeal had merit and yet was conducted in such a way as to call for a frivolous appeal sanction. What the courts have done, however, is to look at the conduct of the appellant as evidence of whether the appeal is without merit and thus frivolous. [footnote omitted] This type of analysis creates confusion. A frivolous appeal should be one that has no merit when viewed objectively and should not be defined by the beliefs or intent of the appellant or attorney. This does not mean, however, that the conduct of the appellant or the attorney is irrelevant to the frivolous appeal sanction. What it does mean is that the conduct is significant for another purpose—to determine the nature and extent of the sanction to be imposed. This is the real reason the courts look to the conduct and the intent it demonstrates. The more flagrant the conduct, the clearer it is that the intent or motive of the person is culpable and the larger the sanction should be. Thus, the conduct or intent should be the measure of the sanction, not the measure of the merit of the appeal. (Martineau at 870-871). In other words, it is crucial for lawyers to know whether the more important consideration for sanctions is the lack of merit of the appeal, or the lawyers’ motives in bringing the appeal. Yet the courts of appeals seem themselves unclear as to the answer— thereby creating a serious problem of fair notice for potentially sanctionable lawyers. Even worse here is that Petitioner had no notice of any kind whatsoever of either the jurisdictional bases of the court’s power to sanction Petitioner or of what behavior the court of appeals was considering sanctioning him for until after it had done so and Petitioner read the court’s decision/ opinion. Opportunity to be heard. The corollary to fair notice, indeed the reason for its importance, is the necessity for an opportunity to be heard “at a meaningful time and in a meaningful manner” 22 (Armstrong, supra, at 552). As this Court said in Fuentes v. Shevin, 407 U.S. 67, 82 (1972): The right to a prior hearing has long been recognized by this Court under the Fourteenth and Fifth Amend- ments. Although the Court has held that due process tolerates variances in the form of a hearing “appropri- ate” to the nature of the case,” Mullane v. Central Hanover Tr. Co., 339 U.S. 300, 313, 70 S. Ct. 652, 657, 94 L.Ed. 865, and “depending upon the importance of the interests involved and the nature of the subsequent proceedings [if any],” Boddie v. Connecticut, 401 U.S. 371, 378, 91 S.Ct. 780, 786, 28 L.Ed.2d 113, the Court has traditionally insisted that, whatever its form, oppor- tunity for that hearing must be provided before the deprivation at issue takes effect. FE. g., Bell v. Burson, 402 U.S. 535, 542, 91 S.Ct. 1586, 1591, 29 L.Ed.2d 90; Wisconsin v. Constantineau, 400 U.S. 433, 437,91 S.Ct. 507, 510, 27 L.Ed.2d 515; Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287; Armstrong v. Manzo, 380 U.S. at 551, 85 S.Ct., at 1191; Mullane v. Central Hanover Tr. Co., supra, 339 U.S. at 313, 70 S.Ct. at 656; Opp Cottn Mills v. Administrator, 312 U.S. 126, 152-153, 61 S.Ct. 524, 535-536, 85 L.Ed. 624; United States v. Illinois Central R. Co., 291 U.S. 457, 463, 54 S.Ct. 471, 473, 478 L.Ed. 909; Londoner v. City & County of Denver, 210 U.S. 373, 385-386, 28 S.Ct. 708, 713-714, 52 L.Ed. 1103. See In re Buffalo, 390 U.S. 544, 550-551, 88 S.Ct. 1222, 1225-1226, 20 L.Ed.2d 117. “That the hearing required by due process is subject to waiver, and is not fixed in form does not affect its root requirement that an individual be given an opportunity for a hearing before he is deprived of any significant property interest, except for extraordinary situations where some valid governmental interest is at stake that justifies postponing the hearing until after the event.” Beddie v. Connecticut, supra, 401 U.S., at 378-379, 91 S.Ct., at 786 (emphasis in original). Re ee ee eR ee ee ee 23 Since this right to a pre-deprivation hearing has been applied in such diverse contexts—e.g., prejudgment replevin statutes (Fuentes), drivers’ license suspensions (Be//), “posting” (Constantino), adoption (Armstrong), suspension from school (Goss v. Lopez, 419 U.S. 565 (1975) ), parole (Morrisey v. Brewer, 408 U.S. 471 (1972) ), final local tax assessments (Londoner v. Denver, 210 U.S. 373 (1907) ), prejudgment wage garnishment (Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337 (1969))—and since the Second Circuit and the few other courts of appeals which have dealt with the matter cf sanctions against lawyers, (e.g., Malhiot v. So. Cal. Retail Clerks Union, 735 F.2d 1133 (9 Cir., 1984) ) apparently believe that no pre-sanction hearing or other opportunity to be heard is necessary, an important constitutional question is presented concerning the application of the Mathews “interest” analysis to this situation. In considering this point it is useful to remember that as a predicate to imposing monetary (and, though indirectly, even worse ~ professional/ethical condemnation!’) on Petitioner, the court of appeals, without a hearing, “convicted” him and/or his client of: bringing a frivolous and vexatious appeal; machinations; bad faith; mischaracterizing facts, law and prior proceedings; abusing process; delaying the case; misusing the bankruptcy court; directly affronting the court; obfuscating the factual and legal issues; creating complexity augmented by mischaracterizations and omissions; making dubious and bizarre claims; fabricating and indulging in fantasy; unreasonably multiplying the proceedings; wasting the court’s time and resources; using the federal courts to frustrate the rights of the state; and engaging in contemptible - conduct. "See, e.g., Code of Professional Responsibility, DR 1-102 (A)(4) and (5), 2- 109 (A)(2) and 7-102 (A) (5). a 24 It is also useful to remember that in making these findings the court of appeals lumped together the two parties and their two lawyers, all of whom played very different roles; it failed to even acknowledge that the district court had required the posting of a bond against potential sanctions only by Cosmopolitan, not by Flushing, let alone by its counsel, Petitioner here; it did not indicate whether Petitioner was being sanctioned because of proceedings in the state courts and/or the bankruptcy court, and/or in the district court, and/or in the court of appeals on the stay and/or on the appeal itself, although proceedings had been held in all those courts, where no sanctions had been sought or imposed; it made no effort to apportion blame, and thus the sanctions’ weight, between the parties and the lawyers, nor between the lawyers, despite the bankruptcy proceeding and much of what followed having been Cosmopolitan’s, not Flushing’s, affair; it admitted (D-13) that it was addressing the appeal’s merits only in order to explain its decision to impose sanctions, yet that discussion of the case’s substance in no way supported findings like “bad faith,” “dubious” claims, “misusing the bankruptcy court,” and much of the rest. In sum, without revealing the jurisdictional bases of its power to sanction Petitioner, without a hearing where Petitioner could con- trovert what he was only later charged with, and although apparently entertaining some doubt about its power to sanction (see par 4 on pg. 5, supra), the court of appeals, in effect, granted summary judgment against him on a long list of professional derelictions, just as other circuit courts have done to other lawyers. In Mathews, in its predecessors, and in its progeny, this Court recognized that only after a careful analysis of the private and public interests involved can procedural due process norms be identified. Because the norm involved here cuts deeply into the 25 administration of the federal judicial system, an important constitutional question is presented. 2. 28 U.S.C. § 1927 We pointed out supra that when 28 U.S.C. § 1927 was amended to allow monetary sanctions to be imposed against lawyers, it was expressly understood that they would receive “all appropriate protections of due process available under the law.” Thus, the important constitutional question is obvious, especially since § 1927 is the basic vehicle for courts of appeal imposing sanctions on lawyers: what procedural due process are they entitled to under the statute? This Court has never answered that question, and doing so would provide every lower federal court in the country with a uniform standard to apply when utilizing an important federal statute.'§ 3. Roadway Express, Inc. We also pointed out supra that because of the very real procedural due process rights afforded the threatened lawyers in the Roadway district court, including “fair notice and and opportunity for a hearing on the record” (447 U.S. at 767), the actual holding of the case involves inherent power only when these rights are present. Since Roadway is frequently, (but, we believe, erroneously) cited for the proposition that such procedural rights are required, and since a definitive answer to whether they really are is obviously quite important, the instant case provides an oppor- '8Subsidiary questions include: (1) whether 28 U.S.C. § 1927 contains an implicit “bad faith” requirement and, if so, the requisite finding could be made without a proper hearing, and (2) whether 28 U.S.C. § 1927 is penal in nature and should thus be strictly construed (Hagerty v. Succession of Clement, 749 F.2d 217 (5 Cir., 1984). 26 tunity for this Court to clarify Roadway. So, too, is Roadway cited (again erroneously we believe) as applicable to sanctions imposed by a court of appeals, when in Roadway the sanctions occurred in the district court. Since quite different considerations exist in each court, and since it is apparently increasingly believed that Roadway does not apply to sanctions by a court of appeals'®, the instant case presents an opportunity for this Court to definitively answer these important questions. 4. “Equal Protection of the Laws” As we stated immediately supra, the literal holding of this Court in Roadway embraces only federal district courts. Thus, closely related to the above point is the question of whether affording different procedural due process rights to trial versus appellate lawyers could pass muster under that part of the Fifth Amend- ment’s due process clause which has been held to contain “equal protection” content. (See Bolling v. Sharpe, 347 U.S. 497 (1954)). Moreover, other provisions of federal law (e.g., F.R. Civ. P. 37 (g) and 46 (c) ) expressiy allow sanctions to be imposed only after a hearing, thereby raising the same “equal protection” question. We do not, at the moment, offer an answer to these questions. We only urge this Court to consider them, since they implicate important constitutional values in the federal judicial system. The Administration of Justice Surely no elaboration is necessary to establish that the threat of sanctions can weigh heavily on appellate lawyers and can “chill” their ardor for taking appeals, especially since unlike trial lawyers 'SMartineau at 874. 27 there is nowhere they can appeal their sanctions as a matter or right.° This is all the more so today “when there are several different sources of authority for imposing a sanction, when there are multiple purposes for the sanction, when varying standards are used in judging whether an appeal is frivolous, when the relation- ship between frivolous appeal sanctions and abusive litigation tactics is unclear, when the sanction is imposed without notice or an opportunity to be heard, and when the procedure varies for initiating consideration of a sanction.”?! Sanctioned lawyers face not only substantial money damages (as here). Conducting litigation in bad faith, delaying, filing frivolous appeals and the like is unethical conduct and thus sanctionable professionally as well. (See, e.g., Code of Professional Responsi- bility, DR 1-102 (A) (4) and (5), 2-109 (A) (2) and 7-102 (A) (5) ). Unless a to-be-sanctioned lawyer can withdraw (which is not easy), there can be a serious conflict of interest and thus a potential malpractice claim. (Here, Petitioner never had an opportunity to withdraw). Publication of sanctions against a lawyer even in reported decisions—let alone in professional and/or general circulation 2Professor Martineau (at 849) implies that there was an interesting reaction in the press and among attorneys to this Court's award of a mere $500 in Tarum, supra. See also NLRB v. Lucy Ellen, 517 F.2d 551 (7 Cir., 1975) and /n Re Bithonev, 486 F.2d 319(1 Cir., 1973). In Flaherty v. Flaherty, 31 Cal. 3d 637, 646 P.2d 179, 183 Cal. Rptr. 508 (1982) Chief Justice Bird extensively assays the lawyers position between the rock and the hard place. 2!Martineau at 849, footnotes omitted. 28 newspapers and magazines—can cause irreparable damage to a well-earned, cherished reputation.” A sanctioned lawyer will be burdened in later seeking other bar admissions, public office, a judgeship. | Clients suffer, too; A lawyer even subject to unknown and/ or unknowable sanctions—let alone a lawyer in Petitioner’s shoes, who was threatened with sanctions for the first time in his appellate opponents brief and next by the court itself during actual oral argument of his client’s appeal—will necessarily and prudently keep one eye out for his own interests. And at a certain point, those interests may be quite different from those of his client. Indeed, it should be noted that in the instant case Petitioner still represented Flushing even while defending itself against the court of appeals’ proposed sanctivns. If all of the consequences which flow from today’s system of appellate sanctioning of lawyers—financial cost, professional discipline, potential conflicts of interest and malpractice claims, reputational injury, and even court congestion (see the “dissent” in Talamini, supra)—are acceptable as a matter of public policy, then this Court should say so. That way, lawyers will know what to expect in the federal appellate courts, and will be able to act accordingly on their own and on their client’s behalfs. However, if the consequences are unacceptable as a matter of public policy, all the more reason for this Court to say so—because this problem of sanctioning appellate lawyers is very much a fact of life today in the 2Here, the New York Law Journal, the \egal newspaper of record for the entire profession in the Greater New York Area, prominently reported, on page 1, what the court of appeals had to say about Petitioner. See Appendix “G” hereto. 29 federal courts, it is a growing problem, and it is becoming very serious for the administration of justice.?? The Sixth and Seventh Amendments In addition to the court of appeals having, in effect, taken other- wise triable issues of fact and summarily resolved them against Petitioner without much notice and without any hearing or other procedural due process at all, it may also have deprived Petitioner of other constitutional rights. The Second Circuit has said that a claim is made in “bad faith” when it is (1) entirely without color, and (2) made for reasons of harassment or delay, or for other improper purposes. (Nemeroff v. Abelson, 620 F.2d 339, 348-349 (2 Cir., 1980)). According to one commentator,” some Courts have suggested that “a request for attorneys’ fees under the bad faith exception is really a malicious prosecution suit in disguise...” If that is so, Petitioner may have possessed a right to a jury trial pursuant to the Seventh Amendment, which has historically guaranteed that procedure in malicious prosecution cases. (See, e.g., Stewart v. Sonneborn, 98 U.S. 187 (1879); 5 J. Moore, J. Lucas & J. Wicker, Moore's Federal Practice, par. 38.11[5] at fn. 12 (2d ed.) 1980)).25 See the bibiliography set forth in the Table of Authorities, supra, which demonstrates the considerable professional interest in and concern about the problem of sanctioning lawyers. *4*Comment, Nemeroff v. Abelson, Bad Faith, and Awards of Attorneys’ Fees, 128 U. Pa. L. Rev. 468, 482 (1979). 25Pre-Roadway, the Sixth Circuit concluded that federal courts lack inherent power to impose bad faith fee sanctions because to do so would be to render a tort judgment without a jury trial. Smoot v. Fox, 353 F.2d 830 (6 Cir., 1965), cert. den. sub Nom. League of Women Voters v. Smoot, 384 U.S. 909 (1966). Although in Roadway this Court decided the inherent power poirt, the Seventh Amendment point appears to remain open. 30 Moreover, since some of the court of appeals charges against Petitioner (“mischaracterizations,” “machinations,” “misuse of the court,” “bad faith,” “obfuscation,” “misleading,” “omissions,” “contemptible conduct” and the like) can be considered tantamount to a charge of criminal contempt (See Skinner v. White, 505 F.2d 685 (5 Cir., 1974), since the actual dollar cost of the sanctions imposed on Petitioner could go as high as $361,260.55, and since this Court in Muniz v. Hoffman, 422 U.S. 454 (1975) reserved the question of whether an individual facing criminal contempt and the possibility of a substantial fine would be entitled to a jury trial,26 Petitioner may have possessed the right to a jury trial pursuant to the Sixth Amendment. In sum, the monetary sanction imposed on Petitioner by the court of appeals could be deemed to be at least the practical equivalent of both a punitive fine for criminal contempt and a tort judgment for malicious prosecution, actions for which the Sixth and Seventh Amendments require jury trials. These questions, too, are important for the reasons set forth supra—because they raise important issues of federal constitutional law and of public policy properly addressed by the supervisory power of this Court.?’ 26At least two courts of appeals have answered in the affirmative: Girard v. Goins, 575 F.2d 160 (8 Cir., 1978) and Douglass v. First National Realty Corp., 543 F.2d 894 (D.C. Cir., 1976). 27[t is interesting to note that both federal contempt powers—18 U.S.C. § 401 and F.R. Crim. P. 42—allow a summary finding of contempt only when the conduct to be punished occurs in open court and in the immediate view of the judge, and even then only if the contempt finding is necessary to protect the dignity of the court, (Johnson v. Mississippi, 403 U.S. 212 (1971)). 31 CONCLUSION In a recent report—“Procedural Rights of Attorneys Facing Sanctions”—the Committee on Federal Courts of the Association of the Bar of the City of New York made a strongly worded recommendation which serves as a perfect note on which to conclude this Petition for a Writ of Certiorari: In the face of [the] ... rapid expansion of the authority for and use of sanctions, there has been relatively little consideration given to the procedural guarantees which must accompany the imposition of sanctions. *** It is imperative, in our view, that Bench and Bar undertake a prompt and searching inquiry into the pro- cedural safeguards which must be observed prior to the imposition of sanctions.28 Petitioner would add only that this Court could, and should, take the lead in that “searching inquiry” by granting this Petition for a Writ of Certiorari. Submitted by, HENRY MARK HOLZER Attorney for Petitioner c/o Brooklyn Law School 250 Joralemon Street Brooklyn, N.Y. 11201 September 16, 1985 (718) 780-7985 The Record of the Association of the Bar of the City of New York, p. 313, 314 (1985). A-| APPENDIX “A” SUMMARY OF ARGUML.sT Both appellants had rights and remedies available to them individually and jointly under State Law to remedy any defaults declared by the State Court under a lease dated October 5, 1975. By its order of April 10, 1984, as affirmed on appeal by the District Court on December 7, 1984, the Federal Judicial system precluded Flushing Savings Bank and Cosmopolitan Aviation Corp. from exercising their rights and remedies under State Law. Both the Bankruptcy Court, and through affirmance the District Court violated 28 U.S.C. 1481 in permitting said orders to remain effective and further, to the extent the Bankruptcy Court, as affirmed by the District Court had discretion to exercise equitable powers under I! U.S.C. § 105(a), they abused said discretion. It was in the interest of creditors of Cosmopolitan Aviation Corp. and Cosmopolitan Aviation Corp. itself, that the status quo created by 11 U.S.C. § 362(a) should have remained ir effect until Flushing Savings Bank completed the appellate process in the State Courts. The conduct of the State agencies, to wit, the Department of Transportation (DOT) and its predecessor in interest Metro- politan Transportation Authority (MTA), when taken in its totality in both the State Court and the Federal Court, constituted a denial to Flushing Savings Bank of procedural due process in violation of the 14th Amendment of the United States Constitution. B-| APPENDIX “B” Towards this legitimate end of prevailing on the appeal Jessel Rothman, P.C., on behalf of Flushing, made, at the very least, a good faith argument. In hindsight we realize that Flushing’s main argument may have been obscured by the prolixity believed necessary to fully set forth Flushing’s contention. Nonetheless, it was there. Flushing’s basic argument was that the Bankruptcy Court should have abstained from awarding possession of the property to the Department of Transportation until the New York State courts passed on the merits of Flushing’s arguménts that under New York State law, the lease between Cosmopolitan and the State should be resurrected. Flushing sought to support this argument by describing its state law arguments to this Court. It is respectfully submitted that both facets of this argument were colorable. Flushing’s “abstention” argument was most strongly supported by I1 U.S.C. § 105(a) which has been construed to provide that an order awarding possession of leased premises should only be granted pursuant to I! U.S.C. § 105(a) under the extraordinary and compelling circumstances. This proposition is grounded on the belief that comity dictates that, generally speaking, state courts should determine issues respecting the possession of real property. This Court has found that the facts of this case warranted a finding that extraordinary and compelling circumstances did exist to justify the April 10, 1984 Order by the Bankruptcy Court. While ~ Rothman does not agree with that finding, he is nor contesting it in this petition. However, Rothman respectfully disputes the Court’s further finding that Rothman’s argument that this case did not fall into an exceptional category was frivolous. As noted in its previous submissions to the Court on behalf of Flushing, the case law B-2 construing I1 U.S.C. § 105(1) [sic] and the judicial gloss placed on that statute was scant, to say the least. There was no legal authority which clearly defined—and thus put Mr. Rothman on notice—as to which situations fell into the exceptional category of “extra- ordinary and compelling circumstances.” It is respectfully sub- mitted that penalizing Mr. Rothman for arguing that this case did not fall into an undefined exceptional category is unduly harsh. As the Court noted, this abstention argument is ultimately premised on the proposition that Flushing had state law rights with respect to the property that could be protected in state court. This Court, concluded that Flushing did not possess such rights (pp. 20- 23) and bolstered this finding by noting that “Flushing has been unable to convince any court so far that it has a possessory interest in the premises” (p. 23). With respect to the latter finding, it appears that the Court is under the misapprehension that, prior to Flushing’s appeal, state courts held on the merits that Flushing had no interest with respect to the property. Quite simpiy, that is not the case. Thus far, none of the adverse decisions issued by the state courts have dealt with Flushing’s substantive rights respecting the property. Rather these determinations barring Flushing’s inter- vention in the state court proceeding—to the extent they were explained—were apparently premised solely on procedural con- siderations. Flushing’s argument on the merits, if it had the opportunity to make it, would have proceeded as follows: The actual “courtroom” experience of Jessel Rothman, P.C., is that the Landlord-Tenant Courts in the State of New York have frequently exercised unbounded discretion in situations where tenants have defaulted and judgments have been entered and warrants issued. B-3 The power of a Court to exercise such discretion in this case would derive from both common law and statute—New York Real Property Actions and Proceedings Law, (NYRPAPL) § 749(3), as well as pre-existing case law-—which provide that a warrant can be vacated and the lease resurrected. In Jones v. Gianferante, 305 N.Y. 135, 11 N.E.2d 419 (1953), the New York State Court of Appeals expressed its approval of the Anpellate Division’s giving the tenant the benefit of the rule or practice in equity which relieves against...forfeitures of valuable lease terms when default in notice has not prejudiced the land- lord, and has resulted from honest mistake, or similar excusable fault. Id. at 138. Although the facts in Jones, supra, are not the same as in the case at bar, a Landlord-Tenant Court could, on the basis of basic proposition set forth therein, find that Flushing, as assignee, (who was not a party in the Landlord-Tenant proceeding) be afforded the opportunity to cure all defaults and take the resurrected lease, and assign it for value, so that it could recoup its investment, (used to construct the valuable building on the property) as /ong as it then made the Landlord whole. The firm believed ii. the basis of its extensive experience in landlord/tenant matters that Landlord-Tenant Courts would strain to avoid an absolute forfeiture where: 1. The tenant or someone on its behalf tenders enough money to make the Landlord whole. 2. The lease is a valuable commercial lease which if lost will cause the tenant, or a mortgagee/ assignee the B-4 complete and unrecoupable loss of its business or li. vestment. 3. The forfeiture of the lease will simultaneously give the landlord a substantial windfall in that it may re-rent the premises for a substantially higher rent than that under the terminated lease. Were Flushing to reappear in State Court, it was counsel’s belief that it could—not necessarily would, but cou/d—establish this three-part predicate: We believed that under this scenario there was a reasonable chance that a Landlord-Tenant court would reinstate the lease if it found any colorable statutory authority to do so. The firm believed it had both, and further felt that Judge Mishler’s Order of December 7, 1984, prejudiced, if not destroyed, the chances of the above occurring: The major obstacle, of course, was the warrant, dated June 2, 1982, since the issuance of a warrant annuls the relation of landlord and tenant. (NYRPAPL § 749 subd. 3). That very same statute, however, gives the Court the power to vacate the warrant “for good cause shown”, at any time prior to its execution. NYRPAPL § 749 sub.3. In fact, it was a fairly recent (1975) amendment to the statute which codified the pre-1975 case law to extend the Court’s power to permit it to vacate not only a pre-warrant default, but the warrant itself after it was issued. See, e.g. Novick v. Hall, 70 Misc.2d 641, 334 N.Y.2d 698, (Civil Ct. of the City of N.Y., N.Y. County, Trial Term Part 49, 19720. In Novick, supra, once the Court found that it had the power to vacate the warrant by comparing the innocent landlord’s potential prejudice to the hardship of the party seeking to vacate the warrant. Counsel, in good faith, believed that a Landlord/Tenant Court in this matter could be induced to consider the relative hardships to B-5 Flushing and the landlord upon an application by Flushing to vacate the warrant upon a tender of all sums due the landlord: IF WARRANT IS NOT VACATED Flushing loses its only security for $500,000 loan to a now defunct corporation. Landlord relets premises for 5 to 10 times the monthly rental in the Cosmopolitan lease. IF WARRANT IS VACATED Flushing may recoup most or all of its investment. Landlord is made current for all arrears, costs, expenses. On the basis of these facts and NYRPAPL § 749(3) and its common law antecedents, counsel believed, in good faith, that Flushing was not foreclosed from some form of success in the state courts, as long as there had been no execution of the warrant and Cosmopolitan was still in possession. RPAPL § 751(1) is only one of the available procedure for Flushing in the event the Landlord/Tenant Court is inclined to vacate the warrant under RPAPL § 749(3). Flushing’s inadvertant (but now apparent) heavy reliance on 6751(1) may have given this Court the notion that Flushing believed that RPAPL § 751(1) was the only way it could succeed in State Court if it vacated the warrant - pursuant to § 749(3). Perhaps the Court, then finding that RPAPL § 751(1) was not available to Flushing, felt that there B-6 We believed that if the Landlord/Tenant Court exercised its power to vacate the warrant, Flushing could have been given an opportunity, either on its own, through Cosmopolitan’s trustee, or otherwise, to cure the defaults, make the landlord whole and take possession. In every case where the warrant was vacated pursuant to NYRPAPL §749(3), the lease was reinstated, and nor always by the statutory vehicle redemption of NYRPAPL § 751(1), but frequently in the discretion of the Landlord/Tenant Court. Thus, in pursuing an avenue by which counsel sought to protect the rights of its client, Flushing’s counsel asked itself not whether the Landlord-Tenant Court could necessarily be statutorily and unequivocally compelled to vacate the warrant and resurrect the lease, but whether the Landlord-Tenant Court might be inclined to permit such resurrection if the Landlord were made whole, and if there was One or more reasonable statutory processes which the Landlord-Tenant Court, if so inclined, could follow to accomplish the resurrection of the lease, thus enabling Flushing to recoup its investment. It also appeared to counsel that the warrant could be vacated upon dismissal of the original Landlord-Tenant proceeding under CPLR 3211(a)(10), for absence of a necessary party. As appears from CPLR 3211(e), subdivision (10) is one of the three sub- divisions of CPLR 3211(a) which is never waived. It can be raised any time, even on or after appeal, and by any party (even if not raised below) or by the Court. Figari v. New York Telephone Company, 32 A.D.2d 434, 303 N.Y.S.2d 245, (2d Dept., 1969). It was certainly reasonable to submit to a State Court that at the time of the trial of this action when the issues of whether the defaults MTA alleged were litigated—the very defaults which MTA claimed Flushing lost its right to possession by failing to cure within 30 days—Flushing was a necessary party under CPLR B-7 321 1(ay{ 10). If Flushing were successful on that issue, the judgment of eviction, and of course, the warrant, would be vacated, ab initio, as the complaint would be dismissed. CPLR 3211(a)(10); Figari v. New York Telephone, supra. As counsel was seeking only to protect whatever chances Flushing had in State Court to recoup its investment by asking a Landlord-Tenant Court to vacate the warrant either under: (a) RPAPL § 749 subd. (3); (b) CPLR 321 1(a)(10); or (c) the theory that the entry of the judgment exceeded the limited power granted the Landlord-Tenant Court by the order vacating the automatic stay, when it learned of the Order of Judge Mishler, which completely by-passed the State Court by ordering delivery of possession by the United States Marshall, Flushing had to appeal that order because it directly prejudiced Flushing. It virtually, if not absolutely, assured that none of the scenarios described above would take place. Although theoretically the harm might not be literally “irreparable”, (in that if Cosmopolitan’s Lease were resurrected, any new tenant could be ousted, having taken possession subject to Cosmpolitan’s rights) in the “real world”, it would be so much more difficult for Flushing to induce a Landlord-Tenant Court to resurrect a lease where there is a new (ostensibly innocent) tenant in possession and operating a business, than it would be for Flushing to induce resurrection of Cosmopolitan’s lease with Cosmopolitan in possession. iia B-8 Effectively, as a result of the then imminent ramifications of Judge Mishler’s Order, no longer could the Landlord-Tenant Court reconcile a resurrection of the lease on the ground that the Landlord is made whole and that no one would be hurt. There would be a new tenant who would necessarily have to suffer if the Landlord-Tenant Court is to vacate the warrant and resurrect the lease. For example, in Oppenheim v. Spike, 107 Misc.2d 55,427 N.Y.S. 2d 826 (App. Term, Ist Dept. 1980) where the Court found an un- equivocal “right and power of the Court to restore a wrongfully removed tenant to possesion of a premises, even after the execution of a warrant under proper circumstances,” it refused to put the tenant back into possession where another tenant had taken possession. Although the Court left the parties to the remedy of money damages for wrongful eviction, this would be a more difficult process for Flushing hereim, and counsel had good reason to try to preserve Flushing’s ability to obtain possession, if possible, as a shorter, more expeditious and less costly process than trying to oust a new tenant or to proceed to determine monetary damages. Therefore, Flushing was within all the perspectives of the reality of Landlord-Tenant Courts, and the discretion exercised in such courts, severely prejudiced by the Order of Judge Mishler and the appeal therefrom—as well as the application for the stay—was taken in good faith, and solely to try to preserve Flushing’s position—whatever it may have been—in the State Courts. C-| APPENDIX “C” UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT X In re: COSMOPOLITAN AVIATION CORP., Debtor, —against— NEW YORK STATE DEPARTMENT OF TRANSPORTATION, Appellee. X Oral Argument held at U.S. Court of Appeals for the 2nd Circuit The United States Courthouse 40 Centre Street New York, New York January 23, 1985 BEFORE: ELLSWORTH A. VAN GRAAFEILAND, THOMAS J. MESKILL, RALPH K. WINTER, Circuit Judges ***K r) ' Nm THE COURT: Did you go to the Court of Appeals on that? MR. KAPLAN: No, Your Honor. We were presently waiting for a decision from the Appellate Term. THE COURT: You never argued an appeal in the New York Cout of Appeals on behalf of Flushing? MR. KAPLAN: Yes, Your Honor, we did. THE COURT: Then why are you saying you didn't? MR. KAPLAN: Because it was a different appeal. We first moved to intervene— THE COURT: Let me tell you something. You know that your opponents have asked for an award under Section 1927. That’s one of the issues in this case. Remember that. MR. KAPLAN: May I clarify this point because there is a vital distinction. Because of Cosmopolitan’s judgment, the landlord- tenant judgment was on appeal, we moved to intervene at the appellate level. That was denied. We went to the Court of Appeals, and the Court of Appeals affirmed that denial and said that it C-3 CONCLUSION For all of the above reasons, this Court should affirm the district court order awarding the premises to the State and award the State attorney's fees pursuant to 28 U.S.C. § 1927. Dated: New York, New York January 14, 1985 Respectfully submitted, ROBERT ABRAMS Attorney General of the State of New York Attorney for Appellee the New York State Department of Transportation LITIGATION BUREAU: RICHARD G. LISKOV BARRIE L. GOLDSTEIN Assistant Attorneys General Of Counsel APPENDIX “D” UNITED STATES COURT OF APPEALS FoR THE SECOND CIRCUIT — No. 794— August Term, 1984 (Argued: January 23, 1985 Decided: May 24, 1985) Docket Nos, 84-5121, 85-5005, 85-5007 _ i ei IN RE COSMOPOLITAN AVIATION CORP., Debtor. eo =—_oorr COSMOPOLITAN AVIATION CORP., Debtor-Appellant, FLUSHING SAVINGS BANK, Intervenor, Appellee Cross-Appellant, Vv. NEw YorRK STATE DEPARTMENT OF TRANSPORTATION, Appellee, Appellant Cross-Appellee.