2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-24-2002

In Re: Prudential

Precedential or Non-Precedential:

Docket 99-5960

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Recommended Citation

"In Re: Prudential" (2002). 2002 Decisions. Paper 39.

http://digitalcommons.law.villanova.edu/thirdcircuit_2002/39
Filed January 24, 2002 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 99-5960 

 IN RE: 

PRUDENTIAL INSURANCE COMPANY 

AMERICA SALES PRACTICE LITIGATION 

AGENT ACTIONS 

Michael P. Malakoff, Esquire, and 

Malakoff, Doyle & Finberg, P.C., 

 Appellants 

Appeal from the United States District Court 

For the District of New Jersey 

D.C. No.: 95-cv-04704 

District Judge: Honorable William H. Walls 

(Argued: December 5, 2000) 

Before: McKEE, ROSENN, and CUDAHY,* 

Circuit Judges. 

(Filed: January 24, 2002) 

David J. Armstrong, Esq. (Argued) 

Dickie, McCamey & Chilcote, P.C. 

Two PPG Place, Suite 400 

Pittsburgh, PA 15222 

_________________________________________________________________ 

* The Honorable Richard Cudahy, Senior Circuit Judge of the United 

States Court of Appeals for the Seventh Circuit, sitting by designation. 
 Michael P. Malakoff, Esq. 

 Malakoff Doyle & Finberg, P.C. 

 The Frick Building, Suite 200 

 Pittsburgh, PA 15219 

 Counsel for Appellants 

 Allyn Z. Lite, Esq. (Argued) 

 Bruce D. Greenberg, Esq. 

 Lite DePalma Greenberg & 

 Rivas, LLC 

 Two Gateway Center, 12th Floor 

 Newark, NJ 07102 

 Melvyn I. Weiss, Esq. 

 Barry A. Weprin, Esq. 

 Brad N. Friedman, Esq. 

 Milberg Weiss Bershad Hynes 

 & Lerach LLP 

 One Pennsylvania Plaza, 48th Floor 

 New York, NY 10119 

 Reid L. Ashinoff, Esq. 

 Sonnenschein, Nath & Rosenthal 

 1221 Avenue of the Americas, 

 24th Floor 

 New York, NY 10020 

 Michael B. Hyman, Esq. 

 Deborah S. Bussert, Esq. 

 Ellyn M. Lansing, Esq. 

 Much Shelist Freed Denenberg 

 Ament Bell & Rubenstein, P.C. 

 200 North LaSalle Street, Suite 2100 

 Chicago, IL 60601 

 Counsel for Appellees 

 Brian S. Wolfman, Esq. 

 Public Citizen Litigation Group 

 1600 20th Street, N.W. 

 Washington, D.C. 20009 

 Counsel for Amicus-Appellant, 

 Public Citizen, Inc. 

 2 
OPINION OF THE COURT 

McKEE, Circuit Judge: 

This appeal arises from numerous state and federal class 

actions that the Judicial Panel on Multi-district Litigation 

consolidated for disposition in the United States District 

Court for the District of New Jersey. This massive, national 

class action involved the claims of over eight million policy 

holders of Prudential Life Insurance Company who were 

represented by many lawyers, including the appellant, 

Michael P. Malakoff and his law firm, Malakoff, Doyle and 

Finberg. The class action eventually reached a settlement. 

However, on the eve of settlement, Lead Counsel for the 

plaintiffs asked the court to sanction Malakoff based upon 

his conduct during the course of the litigation. 

After issuing a rule to show cause on the motion for 

sanctions, the District Court referred the matter to a 

magistrate judge who issued a Report and Recommendation 

("R and R") recommending rather severe disciplinary and 

monetary sanctions. The Chief Judge of the District Court 

then assigned Judge Walls to review the R and R. Judge 

Walls approved the R and R with modifications and directed 

the magistrate judge to recalculate the monetary sanctions 

according to the precise costs and expenses resulting from 

the sanctionable conduct. See In re The Prudential 

Insurance Co., 63 F. Supp. 2d 516 (D. N.J. 1999). This 

appeal followed imposition of the modified sanctions. For 

the reasons that follow, we will affirm in part and reverse in 

part. 

I. Background. 

In 1995, Michael P. Malakoff, a Pennsylvania attorney 

experienced in class action litigation, brought two statewide 

class actions against Prudential Insurance Company of 

America in Ohio and West Virginia state courts on behalf of 

Prudential policy holders in those states. Prudential 

removed those class actions to federal district court and 

Malakoff's subsequent motions to remand were denied. The 

 3 
Judicial Panel on Multi-District Litigation centralized those 

and other class actions that had been brought on behalf of 

Prudential policy holders before Judge Alfred M. Wolin of 

the United States District Court for the District of New 

Jersey. The centralization order also appointed the law 

firms of Milberg, Weiss, Bershad, Hynes & Lerach of New 

York City and Much, Shelist, Freed, Denenberg, Ament, 

Bell & Rubenstein, P.C. of Chicago as Lead Counsel in the 

national consolidated action. From the outset, Lead

Counsel and Malakoff disagreed as to whether the actions 

should be litigated in statewide classes or as a national 

class. Malakoff argued that the two state class actions in 

which he was counsel should be litigated separately from 

the national class asserted by Lead Counsel. 

The consolidated cases, from which Malakoff had 

successfully excluded his clients, were settled on a 

nationwide basis in late 1996, and Malakoff retained 

objector status in the nationwide action. On December 2, 

1996, Malakoff filed an "emergency" motion to recuse Judge 

Wolin. A few days later, Lead Counsel filed a cross-motion 

for sanctions predicated primarily on Malakoff's recusal 

motion. Judge Wolin referred the sanctions motion to then 

Magistrate Judge Joel A. Pisano. Following Malakoff's 

voluminous objections to the proposed settlement, Lead 

Counsel supplemented their cross-motion for sanctions 

with citations to numerous other instances of Malakoff's 

alleged sanctionable conduct. 

As proponent of the statewide claims for Ohio and West 

Virginia, Malakoff raised many objections to the proposed 

national class settlement, and to Lead Counsel's request for 

$90 million in attorneys' fees. In March, 1997, Malakoff 

filed his own motion to sanction Lead Counsel under 28 

U.S.C. S 1927. Shortly thereafter, Malakoff filed an 

additional motion for sanctions, this time relying upon Fed. 

R. Civ. Proc. 11, but alleging the same conduct that formed 

the basis of his S 1927 motion. See A-2818, 3485. On 

March 17, 1997, Judge Wolin, in an exhaustive and 

carefully drafted opinion, approved the settlement. In re 

Prudential Sales Practice Litig., 962 F. Supp. 450 (D. N. J. 

1997). Shortly thereafter, the District Court issued an order 

and opinion awarding attorneys' fees to Lead Counsel. 962 

F. Supp. 572 (D. N. J. 1997). 

 4 
We affirmed Judge Wolin's approval of the settlement on 

appeal, but vacated the attorneys' fee award and remanded 

for further consideration. See In Re Prudential Sales 

Practice Litig., 148 F.3d 283 (3d Cir. 1998). On remand, 

Lead Counsel moved for an interim fee award which 

Malakoff opposed. Lead Counsel also moved for sanctions 

against Malakoff based upon statements Malakoff made in 

his opposition documents. However, that request for

sanctions was withdrawn within the "safe harbor" period.1 

See A-3192, 3485. Nonetheless, a week later Malakoff filed 

yet another motion against Lead Counsel under 28 U.S.C. 

S 1927. That motion was based on the sanctions that Lead 

Counsel had requested under Rule 11 even though that 

motion had been withdrawn. See A-3485(23). 

Following the United States Supreme Court's denial of a 

petition for certiorari from our decision affirming the 

settlement,2 Judge Wolin referred all motions for sanctions 

to Magistrate Judge Pisano. Judge Pisano issued an R and 

R recommending that sanctions be imposed against 

Malakoff. The sanctions included a compensatory payment 

of $100,000 to Lead Counsel under 28 U.S.C. S 1927, and 

a non-monetary requirement that Malakoff attach a copy of 

that R and R as well as a certification that he had paid the 

attorneys fees ordered therein, to all future motions for pro 

hac vice admission in the United States District Court for 

the District of New Jersey. See A-3485A(35). 

Malakoff objected to the R and R. Judge Wolin recused 

himself, and the Chief Judge of the District Court assigned 

Malakoff's objections to Judge William H. Walls of the 

United States District Court for the District of New Jersey. 

Judge Walls substantially adopted Judge Pisano's report 

and rejected Malakoff's objection; however, Judge Walls 

remanded the recommendation for compensatory payment 

to Lead Counsel of $100,000 to Judge Pisano. The remand 

was for a determination of the precise amount of excess 

fees and expenses lead counsel incurred as a result of 

_________________________________________________________________ 

1. For a discussion of the 21 day "safe harbor" provision contained in 

Fed. R. Civ. P. 11 see Zuk v. Eastern Pennsylvania Psychiatric Institute, 

103 F.3d 294 (3rd Cir. 1996). 

2. 525 U.S. 1114 (1999). 

 5 
Malakoff's sanctionable conduct. Judge Walls also reduced 

the time that Malakoff would have to attach the R and R 

and the aforementioned certification of compliance to 

subsequent motions for pro hac vice admission to five years 

from the date of the first motion for pro hac vice admission. 

On remand, Malakoff and Lead Counsel agreed that the 

compensatory sanction award be reduced to $50,000 if we 

uphold the sanctions on appeal. That modification was 

approved, and Malakoff filed this appeal. 

We are only concerned with the propriety of the sanctions 

imposed by the District Court against Malakoff following 

the protracted and hard-fought consolidated class action 

proceedings. Malakoff contends that his conduct did not 

warrant monetary or disciplinary sanctions, and that 

sanctions were imposed without adequate notice or 

"opportunity to be heard."3 Issues pertaining to the 

adequacy of Malakoff's "opportunity to be heard," are 

questions of law subject to plenary review. In Re Tutu Wells 

Contamination Litig., 120 F.3d 368, 383 (3d Cir. 1997). 

However, we review whether the facts warrant the 

imposition of monetary and disciplinary sanctions for an 

abuse of discretion. Accordingly, we will only reverse the 

District Court if the sanctions resulted from an 

unsupported finding of fact, an errant conclusion of law, or 

an improper application of law to fact. See In re: Orthopedic 

Bone Screw Prods. Litig., 193 F.3d 781,795 (3d Cir. 1999). 

The District Court imposed sanctions pursuant to 28

U.S.C. S 1927, as well as its inherent power to control the 

course of litigation. Although we will discuss the legal 

principles underlying these sanctions in more detail below, 

it will be helpful to preliminarily set forth the underlying 

legal principles for imposing sanctions. We will then 

examine Malakoff's conduct to determine if the sanctions 

were appropriate here. 

_________________________________________________________________ 

3. Malakoff argues that he was denied the opportunity to be heard in 

opposition to the sanctions motion because of the District Court's denial 

of his discovery requests regarding submissions made after he filed his 

recusal motion. We have previously held that Malakoff was not entitled 

to more discovery. See Prudential Sales Practices Litig., 148 F.3d at 343- 

45. 

 6 
In Hackman v. Valley Fair, 932 F.2d 239 (3rd Cir. 1991) 

we noted that: 

 a finding of willful bad faith on the part of the 

 offending lawyer is a prerequisite . . . [for imposing 

 sanctions under 28 U.S.C. S 1927]. Bad faith is a 

 factual determination reviewable under the clearly 

 erroneous standard. Once a finding of bad faith is 

 made, the appropriateness of sanctions is a matter 

 entrusted to the discretion of the district court. 

932 F.2d at 242. 

Similarly, an award of fees and costs pursuant to the 

court's inherent authority to control litigation will usually 

require a finding of bad faith.4 In Chambers v. NASCO, Inc., 

501 U.S. 32, 45-46 (1991) the Supreme Court stated that 

a court has the inherent authority to impose sanctions 

when an attorney has acted "in bad faith, vexatiously, 

wantonly, or for oppressive reasons." We also review an 

award of sanctions pursuant to the court's inherent powers 

for an abuse of discretion. "[S]uch an abuse occurs when 

the court's decision rests upon a clearly erroneous finding 

of fact, an errant conclusion of law or an improper

application of law to fact." In Re: Orthopedic Bone Screw 

Products Liability Litig., 193 F.3d 781, 795 (3rd Cir. 1999) 

(internal quotation marks omitted). 

II. Malakoff's Conduct. 

Judge Walls rested the S 1927 sanctions upon the 

following conduct: (1) Malakoff's motion to recuse Judge 

Wolin; (2) Malakoff's criticism of the fee examiner; (3) 

_________________________________________________________________ 

4. We state that a finding of bad faith is "usually" required under the 

court's inherent powers because we noted in Republic of Philippines v. 

Westinghouse Electric Corp., 43 F.3d 65, 74 n.11 that such sanctions do 

not always require a showing of bad faith. Thus, in Martin v. Brown, we 

were careful to note that "[u]sually the inherent power that a district 

court retains to sanction attorneys also requires a finding of bad faith." 

63 F.3d 1252 at 1265 (emphasis added). We need not dwell on when, if 

at all, a court may impose such sanctions without first finding bad faith 

because, as we discuss below, the district court here implicitly made 

such a finding, and that finding was not clearly erroneous. 

 7 
Malakoff's releasing recusal motion papers to the press; (4) 

affidavits Malakoff filed in March of 1997; (5) Malakoff's 

demand for a "keyword" search of discovery documents 

provided by Prudential as well as a demand that Class 

Counsel provide him with charts summarizing evidence to 

be used at the fairness hearing; and (6) sanctions motions 

Malakoff filed under Rule 11 and S 1927. We will examine 

each of these in turn. 

(1). The Motion to Recuse. 

Malakoff filed a motion to recuse as an emergency motion 

on December 2, 1996. He alleged that Judge Wolin had 

improper ex parte communications with various people 

involved in the nationwide litigation, that Judge Wolin 

obstructed reasonable access to documents related to the 

fairness of the settlement and that Judge Wolin had shown 

partiality towards Prudential and towards the fairness of 

the settlement. App. at 833-859. 

Malakoff rested the motion primarily upon the charge 

that Judge Wolin had improper ex parte meetings with 

Prudential's President and counsel on August 12, 1996 at 

a settlement conference, and an October 16, 1996, on the 

record conference with certain state insurance regulators. 

Finally, Malakoff alleged that Judge Wolin had improperly 

attempted to influence a state court trial judge in a 

Pennsylvania state court case. 

Prudential and Class Counsel opposed the recusal 

motion. Judge Wolin set an expedited schedule for 

responses and scheduled a hearing on the motion for

December 13, 1996. However, when Prudential and Class 

Counsel voiced their opposition, Malakoff demanded a delay 

of twenty days to reply. The District Court denied that 

request and held the hearing as scheduled. Judge Wolin 

denied the recusal motion after that hearing and argument 

on the motion. Malakoff then petitioned for a writ of 

mandamus which we denied. His mandamus papers 

reiterated the same arguments that we had rejected on 

appeal from the approval of the class settlement and 

fairness hearing. See 148 F.3d at 342-34. 

 8 
In sanctioning Malakoff under S 1927, Judge Walls 

rejected Malakoff's contention that the recusal motion had 

a colorable basis in fact and was not filed in bad faith. 

Rather, Judge Walls concluded that "Malakoff intentionally 

filed an unreasonable recusal motion." 63 F. Supp. 2d at 

520. In his appeal to us, Malakoff has dropped most of the 

charges he had previously based his recusal motion on, 

including his charge that Judge Wolin had improper ex 

parte settlement communications with Prudential's 

President and counsel.5 Instead, he asserts that the 

following three bases for recusal demonstrate that his 

motion for recusal had a colorable basis and was not filed 

in bad faith. 

First, Malakoff alleges that Judge Wolin attempted to 

intervene on Prudential's behalf in a Pennsylvania state 

court case called Rutt v. Prudential. According to Malakoff, 

in a hearing in that case before the state court trial judge, 

Prudential's counsel, Hirshman, argued for the 

disqualification of a lawyer named Miller who represented 

the Rutts. According to Malakoff, Hirshman told the state 

trial judge that Judge Wolin had information for the court 

regarding Miller and that Judge Wolin "is receptive to a 

discussion with Your Honor by telephone about his views." 

Malakoff's Br. at 13. Malakoff alleges that Hirsham told the 

state judge that Judge Wolin had "information to share" 

and suggested that the state judge call Judge Wolin. Id. at 

13-14. The state court trial judge purportedly declined 

Hirshman's invitation, saying that it would be "highly 

improper" for him to contact Judge Wolin. Id . at 14. 

_________________________________________________________________ 

5. The District Court correctly noted, "the Manual for Complex Litigation 

acknowledges that federal judges may meet separately with parties for 

confidential settlement conferences. Finally, the Code of Judicial 

Conduct for United States Judges permits separate conversations with 

parties with the consent of counsel who are authorized to object. This 

Court concludes that any reasonable attorney would have understood 

that Judge Wolin could permissibly engage in ex parte communication in 

a complex class action such as In re Prudential." 63 F. Supp.2d at 520. 

The district court found that Malakoff waived entitlement to notice of, 

and opportunity to object to, such meetings because he had consented 

to ex parte communications relating to settlement long before he filed the 

recusal motion. Id. 

 9 
According to Malakoff, the whole purpose of this contact 

with the state judge was delaying the trial of the Rutt case 

until after the nationwide settlement was approved.

At the recusal hearing, Judge Wolin stated that he would 

have spoken to the state judge "as a matter of courtesy," 

however, he categorically denied knowing the state judge 

ever attempting to contact him, or even caring about the 

outcome of the Rutt case. App. at 891-92. Nothing on this 

record contradicts Judge Wolin's assertion. To the contrary, 

Malakoff's own brief now belies his charge that Judge 

Wolin attempted to intervene, and affirms that what

actually happened was "that Prudential attorneys urged 

[the state trial judge] to contact Judge Wolin." Malakoff's 

Br. at 38. Therefore, Malakoff's charge was not based on 

anything Judge Wolin said or did. Rather, it was based 

upon something Prudential's counsel tried to get the state 

trial court judge to do. When Malakoff leveled this

allegation of bias in his merits appeal we stated:"[t]here is 

no basis for believing the District Court was attempting to 

influence the state court proceedings in Rutt . . . [and 

Malakoff's claims to the contrary] are clearly without 

merit." 148 F.3d at 345. 

Malakoff also alleged that Judge Wolin ought to be 

recused because the judge had an improper ex parte 

communication with David Gross. Gross' client was a

former Prudential employee named David Fastenberg, and 

Fastenberg had been accused of destroying documents

relevant to the Prudential litigation. Malakoff based this 

allegation of Judge Wolin's impropriety upon a statement 

Judge Wolin made at an October 16, 1996 hearing. During 

the course of that hearing, Judge Wolin stated that

"Fastenberg's own lawyers say there was no document

destruction." Malakoff's Br. at 15. Malakoff alleged that 

this purportedly improper communication on a matter

concerning destruction of material and disputed 

documents, demonstrates Judge Wolin's favoring of 

Prudential. 

However, Prudential had fired Fastenberg for allegedly 

allowing the destruction of documents in offices he

supervised, and Fastenberg responded by suing Prudential 

for wrongful determination. The alleged document 

 10 
destruction was a matter of public record. Moreover, 

Fastenberg's termination and his suit against Prudential 

had been widely reported in the press. Judge Wolin 

explained to Malakoff at the recusal hearing that he learned 

of Fastenberg's denial in the press and through a letter 

written to him by Lead Counsel for Prudential in a related 

case. Nothing on this record contradicts that. There was no 

improper communication by Judge Wolin with Fastenberg's 

lawyer. In fact, there was no communication at all.

Furthermore, Malakoff should have readily dismissed any 

suggestion that Judge Wolin favored Prudential when Judge 

Wolin directed Class Counsel to conduct an accelerated 

investigation of document destruction allegations. On 

January 6, 1997 Judge Wolin fined Prudential $1,000,000 

for destroying documents. In re Prudential Ins. Co. of 

America Sales Practices Litig., 169 F. R. D. 598 (D. N. J. 

1997). Yet, Malakoff persists in this accusation to this very 

day. 

Malakoff's third reason for insisting that his recusal 

motion had a colorable basis and was not filed in bad faith 

is his charge that Judge Wolin had an October 16, 1996 on 

the record conference with state insurance regulators 

during which Judge Wolin indicated that he favored a 

national settlement of the policyholders' claims against 

Prudential. In Malakoff's view, the court's indication that it 

favored a settlement showed that it was partial to 

Prudential and could not, therefore, be an impartial, 

objective reviewer of the settlement. Malakoff rests this 

claim upon the following statement of Judge Wolin at the 

October 16 hearing: 

 I'd like to be on the same page with you, realizing that 

 we all have the same constituency. When I say 

 `constituency,' I'm talking about the claimants, the 

 10.7 million people who are policyholders of Prudential 

 . . . . Because I think that our goals have to be the 

 same: we want to eliminate confusion, we want to 

 make sure that claimants are . . . remediated properly. 

Malakoff's Br. at 41. Judge Wolin also referred to the 

proposed settlement as "my settlement" and said "although 

I wasn't in all of the negotiations, I wasn't just a pretty 

 11 
face." Id. at 42. However, nothing suggests that these 

remarks have the significance that Malakoff attempts to 

attach to them. Moreover, Malakoff does not bother to 

mention that Judge Wolin was careful to add the following 

caveat at the end of the October conference: 

 No one should leave here today thinking that Judge 

 Wolin's silence, Judge Wolin's nod, a smile at a 

 particular time, means that he will approve this 

 settlement. I don't have the slightest idea. I don't know 

 who the objectors are, I haven't heard any evidence. 

App. at 603. Moreover, we have already rejected the"spin" 

Malakoff's recusal motion sought to put on those 

statements. Malakoff made the same argument regarding 

these remarks on appeal from the fairness hearing. We 

stated that the "allegation [of impropriety] has no merit." 

148 F.3d at 344. 

(2). Criticism of the Fee Examiner. 

On November 6, 1996, the District Court appointed 

Stephen M. Greenberg, Esq., as a Fee Examiner to"review 

the application for attorneys' fees and expenses" for Class 

Counsel. App. at 677. According to Prudential, that

appointment was made after consultation with Class 

Counsel and Prudential and after those counsel had met 

with Greenberg. Malakoff received a copy of the Order 

appointing Greenberg and on November 15, 1996, Malakoff 

wrote a letter to Greenberg introducing himself. 

Significantly, Malakoff did not object to the fact or the 

manner of Greenberg's appointment in that letter. 

However, two months later, Malakoff filed an emergency 

motion seeking to have Greenberg's appointment vacated. 

Malakoff alleged that Greenberg's appointment had been ex 

parte and in violation of Fed. R. Civ. P. 53(d)(1), because 

the first meeting of the parties and their attorneys was not 

held within 20 days of the order appointing the examiner.6 

_________________________________________________________________ 

6. Fed. R. Civ. P. 53(d)(1) requires the fee examiner to conduct a "first 

meeting of the parties or their attorneys to be held within 20 days after 

the order [appointing the examiner] and notify the parties or their 

attorneys." Malakoff says that when he requested that the district court 

enforce Rule 53 and direct the fee examiner to hold the meeting, the 

district court replied, "It's not a perfect world, is it Mr. Malakoff?" 

 12 
Judge Wolin denied Malakoff's motion to vacate 

Greenberg's appointment. The judge found that Malakoff 

had waived his right to object by (1) not objecting at the 

time Greenberg was appointed; (2) writing to Greenberg 

nine days after Greenberg was appointed proposing that 

they collaborate in efforts to obtain materials related to the 

application for attorneys' fees; (3) waiting two months 

before seeking to vacate Greenberg's appointment, and (4) 

failing to provide any reason for waiting those two months. 

App. at 2501(4). Judge Wolin also found that Malakoff's 

Rule 53 objections were "hyper-technical" since "Greenberg 

met with the parties five days prior to the date of the 

November order and 27 days after the date of the November 

order." Id. at 2501(1)-2504(14)(a)). 

In his "sanctions opinion," Judge Walls concluded that 

Malakoff had no basis for trying to vacate Greenberg's 

appointment because Malakoff had initially approved

Greenberg's appointment. 63 F. Supp.2d at 521. Moreover, 

Judge Walls agreed that Malakoff's Rule 53 argument was 

"hyper-technical." Id. 

(3). Release of Motion to Recuse to the Press. 

Judge Walls accepted Magistrate Judge Pisano's 

consideration of Malakoff's failure to provide Judge Wolin 

with courtesy copies of motion papers in imposing 

sanctions. Judge Walls noted that: 

 Magistrate Judge Pisano indicates that Mr. Malakoff 

 repeatedly failed to send courtesy copies of motion 

 papers to Judge Wolin's chambers. This deficiency was 

 specifically addressed by Judge Wolin in Mr.

 Malakoff's December 13, 1996 motion to recuse. 

In re: The Prudential Insurance Co., 63 F. Supp. 2d at 522. 

Malakoff submits that Judge Walls found that his failure 

to provide courtesy copies of his various motions to Judge 

Wolin was sanctionable conduct. He contends he did not 

provide courtesy copies because, until that time, he had 

always filed his motions in accordance with local rules and 

Judge Wolin never had objected to that practice. Under 

local rules, the clerk of court forwards filings to the 

 13 
assigned judge. According to Malakoff, it was only at the 

end of the recusal hearing that Judge Wolin chastised him 

for not providing the courtesy copies of filings. Malakoff 

asserts that Judge Walls was therefore wrong in finding 

that his failure to provide courtesy copies was sanctionable. 

However, Judge Walls did not consider Malakoff's general 

failure to provide courtesy copies to Judge Wolin in 

imposing sanctions. Rather, Judge Walls considered 

Malakoff's release of his recusal motion to the press 

without first providing a copy to Judge Wolin. 

At the recusal hearing, Judge Wolin expressly found that 

"copies of the Malakoff motion were submitted or leaked to 

the press in advance of their receipt by the Court. At least 

three major newspapers sought comment from this Court 

as to applications, the existence of which the Court was 

unaware." App. at 1492. Malakoff claims that several days 

after he filed the motion to recuse, he was contacted by the 

press and provided copies to them. Thus, because he

complied with the rules of court and because the press 

initiated the contact, he insists that this conduct was not 

sanctionable. But, Judge Walls found otherwise. He 

concluded: "as an experienced attorney, [Malakoff] should 

have realized that the clerk's office would not deliver 

courtesy copies to chambers immediately. [Malakoff's] 

failure to accord Judge Wolin the same respect as the 

media was `unacceptable' and indicates that he acted in 

bad faith." 63 F. Supp.2d at 522. 

(4). The March 1997 Affidavits. 

In December of 1996, Judge Wolin held a hearing to 

address accusations that Prudential had destroyed 

documents related to the class action. Malakoff was not in 

court that day, but he maintains that his associate, David 

Snyder, was. Nonetheless, on January 13, 1997, Malakoff 

filed his "Tenth Affidavit," alleging that an improper ex 

parte communication occurred on December 30, 1996 

between Judge Wolin, Karen Suter, Deputy Attorney 

General for the New Jersey Department of Banking, and 

Anita Kartalopolous, Deputy Commissioner for that 

Department. Subsequent to the filing of Malakoff's "Tenth 

 14 
Affidavit," Suter and Kartalopolous filed affidavits denying 

any improper ex parte discussion with Judge Wolin. In fact, 

in those affidavits, both women said they asked the

courtroom clerk if there was an attorney conference room 

where they could make a phone call to the Banking 

Commissioner. According to those sworn affidavits, a 

courtroom deputy told them none was available. However, 

Judge Wolin overheard that conversation and offered the 

use of one of the phones in his library conference room. 

That was the extent of their conversation with Judge Wolin. 

However, despite the affidavits from Suter and 

Kartalopolous, Malakoff filed a "Corrected Tenth Affidavit," 

on February 17, 1997, which was identical to the"Tenth 

Affidavit" except that it changed, without explanation, the 

date of the alleged ex parte communication from December 

30th to December 16. Then, on March 14, 1997, Malakoff 

filed his "Twenty Third Affidavit," in which he once again 

alleged that an improper ex parte discussion occurred on 

December 16, between Judge Wolin, Suter and 

Kartalopolous. Three days later, Malakoff filed his"Twenty 

Fourth Affidavit," in which he repeatedly accused Judge 

Wolin of catering to the interests of Prudential and Class 

Counsel. 

Judge Walls found that the 23rd and 24th affidavits

merely restated already rejected arguments, attempted to 

explain Malakoff's reasons for filing motions that had 

already been denied, and repeated allegations of Judge 

Wolin's impropriety that Malakoff had made in his recusal 

motion. Judge Walls also found that the 24th affidavit was 

not filed in connection with any new or pending motion. 

Consequently, Judge Walls concluded that Malakoff filed 

the 23rd and 24th affidavits for the sole purpose of 

embarrassing Judge Wolin. 63 F. Supp.2d at 522. 

(5). Discovery Matters. 

Judge Walls considered two instances of Malakoff's 

conduct over discovery materials in sanctioning Malakoff. 

The first involved Malakoff's demand for a "keyword" 

search of documents produced during discovery. On 

October 28, 1996, Class Counsel and Prudential received 

 15 
Judge Wolin's order conditionally approving the settlement 

of the consolidated class action. Judge Wolin made 

available to all policyholders who signed a Stipulation of 

Confidentiality "deposition transcripts and attached 

exhibits as well as . . . all other documents generated in 

this lawsuit." 

According to Class Counsel, over 1,000,000 pages of

documents, 160 computer diskettes, 500 audio and video 

tapes, hundreds of interviews with current and former 

Prudential employees, twenty depositions, plus all of the 

documents that Prudential had produced to the Multi-State 

Task Force was then available. Numerous lawyers for

policyholders apparently reviewed the documents in three 

document depositories around the country that Class

Counsel had established for that purpose. According to 

Class Counsel, Malakoff indicated in early November 1996 

that he intended to review the documents and Class 

Counsel sent him copies of their own indices to the

documents to assist with that review. However, Malakoff 

did not review the materials. Rather, he demanded 

additional discovery despite not having reviewed the 

discovery material already available. On December 30, 

1996, after Malakoff complained about not being able to 

review the documents, Judge Wolin suggested that he go to 

Class Counsel's offices in New York for document review. 

Malakoff maintains that he asked Judge Wolin to direct 

Class Counsel to allow him (Malakoff) to use the class 

keyword search facility because only a few of the many 

documents were relevant to Malakoff's objections. Judge 

Wolin denied that request as unfair, and Malakoff sent an 

associate to Class Counsel's office. However, the associate 

only demanded that Class Counsel conduct keyword 

searches for him. He did not review any discovery material. 

The second set of circumstances involving discovery that 

Judge Walls considered concerned Malakoff's demand for 

"charts" summarizing evidence. On January 28, 1997,

Judge Wolin entered an order permitting Class Counsel to 

use demonstrative evidence at the fairness hearing, and 

requiring Class Counsel to provide an adequate opportunity 

for any interested party to inspect the demonstrative 

evidence at Class Counsel's New York office. Judge Wolin's 

 16 
order specified, however, that the "opportunity for such 

inspection does not create any obligation [on Class

Counsel] to provide any copies of such demonstrative 

evidence to any person inspecting the same." 

Malakoff asserts that it was not feasible for him to review 

this demonstrative evidence in New York, and he therefore 

requested that Prudential and Class Counsel fax copies of 

the charts to him. According to Malakoff, Prudential 

complied with his request, but Class Counsel refused and 

demanded that he go to New York to review the charts. 

Rather than doing that, Malakoff filed yet another 

"emergency" motion on February 19, 1997. Judge Wolin 

denied that motion finding, among other things, that 

Malakoff had not shown why compliance with the previous 

order allowing inspection was not feasible. Judge Wolin was 

also concerned that Malakoff waited until the eleventh hour 

to raise the issue (the fairness hearing was set for February 

24, 1997). 

Judge Walls considered these actions and wrote: 

 Mr. Malakoff's actions demonstrate a failure on his 

 part to abide with the discovery process agreed to by 

 counsel and the Court in this action. That no other 

 attorney objected to the process or sought specific 

 concessions from the court or opposing counsel 

 demonstrates that the procedure was unobjectionable. 

 Mr. Malakoff's resistance to the discovery process and 

 his attempts to exempt himself therefrom unreasonably 

 multiplied the straightforward discovery process and 

 delayed the ultimate settlement of the case.

63 F. Supp.2d at 522. 

(6). Filing Rule 11 and S 1927 Sanctions Motions. 

As noted, when Malakoff filed his recusal motion, Class 

Counsel cross-moved for sanctions against Malakoff under 

S 1927, and then, on the same day as the fairness hearing, 

supplemented their cross-motion for sanctions. In 

response, Malakoff filed his own motion for sanctions 

against Class Counsel under S 1927, and shortly thereafter, 

he served a motion for sanctions against Class Counsel 

 17 
under Fed. R. Civ. P. 11 based upon Class Counsel's

sanctions motion. 

Malakoff's S 1927 motion consisted entirely of his 

defenses to Class Counsel's sanctions motion. In his R and 

R, Magistrate Judge Pisano concluded that Malakoff's 

S 1927 motion "fails mightily to show why the court should 

sanction Class Counsel." R&R at 31. Magistrate Judge 

Pisano also concluded that Malakoff's Rule 11 motion was 

absolutely identical to his S 1927 sanctions motion. Judge 

Walls held that both motions were only defenses to Class 

Counsel's S 1927 motion and did "not advance a coherent 

legal argument as to why [Class Counsel] should be 

sanctioned." 63 F. Supp.2d at 523. Inasmuch as Malakoff 

conceded that the legal standards for S 1927 and Rule 11 

are different, Judge Walls concluded that these duplicitous 

motions demonstrated that Malakoff had abused the 

sanctions process.7 Id. Judge Walls concluded that 

Malakoff's "identical motions were baseless and filed in bad 

faith." Id. 

III. Sanctions Under 18 U.S.C. S 1927. 

As noted above, the monetary sanctions here were 

imposed pursuant to 28 U.S.C. S 1927. 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. 

28 U.S.C. S 1927. "Although a trial court has broad

_________________________________________________________________ 

7. For example, S 1927 sanctions are applicable only to an attorney and 

requires a finding of bad faith. Williams v. Giant Eagle Markets, Inc., 

883 

F.2d 1184, 1191 (3d Cir. 1989). Rule 11 authorizes sanctions against a 

signer of a pleading, etc. presented for an improper purpose and requires 

only a showing of objectively unreasonable conduct. Fellheimer, Eichen & 

Braverman v. Charter Technologies, Inc., 57 F.3d 1215, 1225 (3d Cir. 

1995). 

 18 
discretion in managing litigation before it, the principal 

purpose of imposing sanctions under 28 U.S.C. S 1927 is 

the deterrence of intentional and unnecessary delay in the 

proceedings." Zuk v. Eastern Pennsylvania Psychiatric 

Institute, 103 F.3d 294, 297 (3d Cir. 1996) (citation and 

internal quotations omitted). 

As is evident from the text of the statute, S 1927 requires 

a court to find an attorney has (1) multiplied proceedings; 

(2) in an unreasonable and vexatious manner; (3) thereby 

increasing the cost of the proceedings; and (4) doing so in 

bad faith or by intentional misconduct. Williams v Giant 

Eagle Markets, Inc. 883 F.2d 1184, 1191 (3rd Cir. 1989). 

"[B]efore a court can order the imposition of attorneys' fees 

under S 1927, it must find willful bad faith on the part of 

the offending attorney." Zuk, 103 F.3d at 297. "Indications 

of this bad faith are findings that the claims advanced were 

meritless, that counsel knew or should have known this, 

and that the motive for filing the suit was for an improper 

purpose such as harassment." Smith v. Detroit Fed'n of 

Teachers Local 231, Am. Fed. of Teachers, AFL-CIO , 829 

F.2d 1370, 1375 (6th Cir. 1987). Inasmuch as S 1927

addresses the impact conduct has on the proceedings, 

sanctions that are imposed under S 1927 must only impose 

costs and expenses that result from the particular 

misconduct. Martin v. Brown, 63 F.3d 1252, 1264 (3d Cir. 

1995). Moreover, these costs and expenses are limited to 

those that could be taxed under 28 U.S.C. S 1920. Id. 

IV. Sanctions Pursuant to the Court's Inherent Power. 

In addition to the monetary sanctions imposed under

S 1927, the District Court also imposed disciplinary 

sanctions. These sanctions required Malakoff to certify that 

he had paid the monetary fine, and attach a copy of the R 

and R to all applications for admission pro hac vice for five 

years from the date of the first such application. This 

sanction was imposed under the court's inherent power. 

Moreover, the sanctioning order also provided that, if 

Malakoff were to be sanctioned again within the five year 

period, the five year limitation would disappear and he 

would thereafter be required to submit the proof of

payment, together with a copy of the R and R, with every 

 19 
application for pro hac vice admission to the District Court 

for as long as he practiced law. In re Prudential Ins. Co. of 

Am. Sales Prac. Litig., 63 F. Supp. 516, 525 (D. N.J. 1999). 

"It has long been understood that certain implied powers 

must necessarily result to our Courts of justice from the 

nature of their institution, powers which cannot be

dispensed with in a Court, because they are necessary to 

the exercise of all others." Fellheimer, Eichen & Braverman, 

P. C., v. Charter Technologies, Inc., 57 F.3d 1215, 1224 

(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 43 

(1991)(internal brackets and citations omitted))."Among the 

implied and incidental powers of a federal court is the 

power to discipline attorneys who appear before it." Id. 

(quoting Chambers, at 43). 

Circumstances that may justify sanctions pursuant to a 

court's inherent power include 

 cases where a party has acted in bad faith, vexatiously, 

 wantonly, or for oppressive reasons. . . . The imposition 

 of sanctions in this instance transcends a court's 

 equitable power concerning relations between the 

 parties and reaches a court's inherent power to police 

 itself, thus serving the dual purpose of vindicating 

 judicial authority without resort to the more drastic 

 sanctions available for contempt of court and making 

 the prevailing party whole for expenses caused by his 

 opponent's obstinacy. Id. 

(quoting Chambers, at 45-46). 

A court may resort to its inherent power to impose 

sanctions even if much of the misconduct at issue is also 

sanctionable under statute or rules of court. Chambers, at 

45. However, "[b]ecause of their very potency, inherent 

powers must be exercised with restraint and caution." 

Chambers, at 44; see also Eash v. Riggins Trucking, Inc., 

757 F.2d 557, 562 (3d Cir. 1985)(en banc). Although a 

court retains the inherent right to sanction when rules of 

court or statutes also provide a vehicle for sanctioning 

misconduct, resort to these inherent powers is not 

preferred when other remedies are available. Moreover, the 

analysis in Chambers "leads to the conclusion that if 

statutory or rules-based sanctions are entirely adequate, 

 20 
they should be invoked, rather than the inherent power." 

Gregory P. Joseph, Sanctions: The Federal Law of Litigation 

Abuse, 428 (3rd ed. 1999) (hereinafter Sanctions Treatise). 

Therefore, "[g]enerally, a court's inherent power should be 

reserved for those cases in which the conduct of a party or 

an attorney is egregious and no other basis for sanctions 

exists." Martin v. Brown, 63 F.3d at 1265. 

V. The Court did not Abuse its Discretion in Imposing 

 Sanctions Under S 1927 

As we stated at the outset, sanctions under S 1927 or the 

court's inherent power may not be made in the absence of 

a finding of bad faith. However, that finding need not be 

explicit. An implicit finding of bad faith will support 

sanctions just as well so long as it is not an abuse of 

discretion, not based upon clearly erroneous factual 

findings, and not based upon an error of law. Baker

Industries at 209. 

Here, Judge Walls did not make an express finding of bad 

faith. Nor did Judge Walls rely upon any of the abovespecified conduct in particular. Rather, he based his finding 

of the requisite bad faith and vexatious conduct on the 

totality of the campaign Malakoff waged during the course 

of this litigation, not upon any single maneuver. The 

District Court assessed that conduct in its totality in 

imposing sanctions and affirming the findings of the 

Magistrate Judge. In his R and R, the Magistrate Judge 

explained: 

 [w]hen viewed individually, each single instance of 

 misbehavior by Mr. Malakoff might not warrant the 

 sanctions arrived at by the court. But considered as a 

 whole, his transgressions evidence a pattern of 

 obfuscation and mean spiritedness. Thankfully, it is 

 not often that the Court encounters such behavior, and 

 the undersigned is completely satisfied that, under 

 disciplinary rubric, Mr. Malakoff's conduct warrants 

 stern sanctions. 

R&R at 25 (emphasis added). Moreover, the District Court 

specifically cited this finding in affirming the sanctions. See 

In Re Prudential 63 F. Supp. 2d at 521 ("The Magistrate 

 21 
Judge concluded that Mr. Malakoff `abused the privileges of 

practicing before this Court. His behavior since his arrival 

on the scene in this litigation has been deplorable. 

Examples of this conduct are numerous and . . .[not] a 

one-time lapse in judgment.' The Court thus found that 

`considered as a whole, his transgressions evidence a 

pattern of obfuscation and mean spiritedness.' "). 

Judge Walls noted that Malakoff "began bombard[ing] the 

Court with paper soon after the transfers." In Re Prudential 

Insurance Co., 63 F. Supp 2d at 518. This record readily 

discloses implicit findings of bad faith, and those findings 

were not clearly erroneous. 

 The district court's finding of willfulness on 

 [Malakoff's] part, as a finding of fact, is subject to 

 reversal only if clearly erroneous. This standard 

 requires us to pay deference to the district court's 

 interpretation of the factual record before it. Once such 

 a finding is made, the appropriateness of assessing 

 attorneys' fees against counsel under section 1927 is a 

 matter for the district court's discretion. 

Baker Industries, 764 F.2d at 209-10 (citations omitted). 

Accordingly, we do not second-guess the District Court that 

was managing the front lines of this massive class action 

unless its findings were clearly erroneous or its exercise of 

decision arbitrary or unjustified. 

The course of conduct here allows for only one 

conclusion, and it is the one reached by the Magistrate 

Judge and District Court. We can not conclude that the 

District Court's finding that Malakoff litigated in a 

vexatious manner and in bad faith was clearly erroneous. 

He multiplied the proceedings at nearly every turn, and 

increased the cost of this litigation accordingly. His 

baseless recusal motion required responses by Class

Counsel and a hearing by Judge Wolin. His emergency

motion to vacate the fee examiner's appointment, an

appointment that he originally approved, also necessitated 

responses by Class Counsel and required Judge Wolin to 

write a thirteen page opinion in support of his order 

denying the motion. His demand for a key word search 

(after he failed to make any efforts to review the documents 

 22 
available at Class Counsel's New York Office) meant that 

Judge Wolin had to address that demand at a case 

management conference held to discuss the proposed 

settlement hearing. Malakoff's emergency motion 

demanding that Class Counsel fax charts summarizing the 

evidence to be used at the fairness hearing once again 

necessitated responses by Class Counsel and once again 

meant that Judge Wolin had to write an opinion and order 

denying that motion. His filing of two identical sanctions 

motions, despite the fact that they were filed under different 

provisions having different standards of proof, necessitated 

responses by Class Counsel and an examination and 

analysis by Magistrate Judge Pisano. Finally, even though 

his March 1997 affidavit may not have required the use of 

judicial resources, the subjects of those affidavits, viz., New 

Jersey Deputy Attorney General Suter and New Jersey

Deputy Insurance Commissioner Kartalopolous, felt 

compelled to respond to the erroneous allegations Malakoff 

made in the affidavit of improper ex parte discussions with 

Judge Wolin. 

The sanctions that were imposed were a direct result of 

that vexatious conduct and not an abuse of discretion. The 

only real question with regard to those sanctions is whether 

Malakoff was properly afforded due process before the 

sanctions was imposed. Although we believe Malakoff was 

afforded due process as to the additional costs and fees 

taxed against him under S 1927, we are troubled by the 

absence of particularized notice of sanctions imposed under 

the court's inherent powers. 

VI. Due Process Requirements. 

"The Due Process Clause of the Fifth Amendment 

requires a federal court to provide notice and an 

opportunity to be heard before sanctions are imposed on 

a[n] . . . attorney." Martin v. Brown, at 1262. We have held 

that "particularized notice is required to comport with due 

process." Fellheimer, at 1225. "Generally speaking,

particularized notice will usually require notice of the 

precise sanctioning tool that the court intends to employ." 

Id. An opportunity to be heard is "especially important" 

where a lawyer or firm's "reputation is at stake," because 

 23 
sanctions "act as a symbolic statement about the quality 

and integrity of an attorney's work -- a statement which 

may have a tangible effect upon the attorney's career." Id. 

at 1227. 

Here, Malakoff did receive notice in the form of the 

motion for sanctions that Lead Counsel filed on December 

10, 1996. Moreover, on December 10, 1996, plaintiff's 

liaison counsel, co-lead counsel and executive counsel gave 

Malakoff written notice that on December 13, 1996, they 

would cross-move before Judge Wolin for an order 

pursuant to 28 U.S.C. S 1927 to impose sanctions. 

However, that notice informed Malakoff that sanctions 

would be sought 

 upon the firm of Malakoff, Doyle & Finley, P.C., for 

 unreasonably and vexatiously multiplying the

 proceedings in this matter, and seeking payment by 

 Malakoff, Doyle & Finley, P.C. of the excess costs, 

 expenses and attorneys' fees reasonably incurred to 

 respond to the application of Kittle and Krell to 

 disqualify the judge in this matter." 

The notice only referred to sanctions under 28 U.S.C. 

S 1927, and made no mention of sanctioning Malakoff

under the court's inherent powers. The supporting 

affidavits of attorney Allyn Z. Lite and Brad N. Friedman 

also referred only to sanctions under 28 U.S.C.S 1927 

without any reference to the court sanctioning Malakoff 

under its inherent powers. 

In upholding the Magistrate Judge's determination that 

Malakoff had not been denied due process, Judge Walls 

cited to page 24 of the R and R. See 63 F. Supp 2d at 523. 

There, the Magistrate judge stated: 

 In the sanctions matters currently before the Court, all 

 parties were given ample notice of what behavior was 

 in dispute. Each side's motion papers and affidavits set 

 forth in detail why it believes actions taken by the 

 other party's attorneys should result in sanctions. 

 Furthermore, the questions posed at oral argument 

 afforded to the parties an inkling of the Court's 

 concerns about what behavior might be objectionable. 

 Finally, each party was able to listen at oral argument 

 24 
 to the concerns voiced by the other. Surely, each side 

 was on particularized notice of what behavior and 

 actions were at issue. 

 Class Counsel and Mr. Malakoff were also given at 

 least four opportunities to be heard. First, both sides 

 presented legal arguments in their numerous and 

 lengthy briefs and memoranda accompanying the 

 various sanctions motions. Second, Mr. Malakoff and 

 Class Counsel both sent to the Court letter memoranda 

 accompanying their submissions regarding the

 sanctions record. Third, at oral argument, each side 

 was given time for a presentation to the Court, and 

 additional time for rebuttal. Finally, at the end of oral 

 argument, the Court advised the parties that it would 

 entertain one final letter memorandum from each side, 

 so long as each was no longer than five pages. Both 

 took advantage of all four of these opportunities to 

 present arguments to the Court. Certainly, the parties 

 have been given meaningful and numerous 

 opportunities to be heard. 

R&R. at 23-24. We agree as to the statutory sanctions. 

This record clearly establishes that the sanctions that 

were imposed under S 1927 satisfied due process 

requirements.8 However, as we suggest above, we are

_________________________________________________________________ 

8. Malakoff argues that the District Court deprived him of due process by 

refusing discovery regarding record submissions after he filed his recusal 

motions. He argues that those submissions were used to deny the 

recusal motion and to justify the award of sanctions against him. Yet, 

Malakoff chose to demarcate his recusal motion as an"emergency" 

motion. In denying discovery, the court merely treated Malakoff's motion 

like the emergency he himself declared it to be, and afforded it the 

immediate attention Malakoff's assertion of"emergency" demanded. He 

now seeks to use the court's prompt handling of his"emergency" to 

argue that the court denied him due process by not granting a month 

long continuance to take discovery to establish that the emergency he 

had alleged did in fact exist. 

Malakoff's claim of denial of due process as to his "emergency" motion 

thus reduces to a claim that without discovery he was denied an 

opportunity to develop a full and complete sanction record. Malakoff's 

Br. at 54. However, he never explains why this is so, and we doubt that 

any explanation is possible given the District Court's finding of bad 

faith. 

 25 
troubled by the propriety of the non-monetary sanctions 

imposed pursuant to the court's inherent powers. 

VII. Sanctions Under the Court's Inherent Powers and 

Conditions on Pro Hac Vice Admission. 

Malakoff does not challenge the court's authority to 

impose the aforementioned conditions on his applications 

for pro hac vice admission in the District Court of New 

Jersey. He does, however, argue that he was denied notice 

and an opportunity to be heard as to those sanctions. He 

claims that he first became aware that the Magistrate 

Judge was considering requiring him to attach this"scarlet 

letter" (our term, not Malakoff's) to his pro hac vice 

applications only upon reading the July 15, 1999, R and R. 

Class Counsel argues to the contrary and insists that 

Malakoff had ample notice. According to Class Counsel, the 

issue was raised by Class Counsel at oral argument during 

the sanctions hearing and again in their post-argument 

brief. 

The Magistrate Judge found that Malakoff was given four 

opportunities to be heard on the sanctions that were being 

considered. See R&R at 24. Judge Walls found that 

Malakoff received particularized notice in the original 

S 1927 sanctions motion filed in December of 1996. He also 

found that "[a] survey of the competing sanctions motions 

filed over the course of the Prudential litigation further 

indicates that Mr. Malakoff was on notice to the particular 

factors that he had to address if he were to avoid 

sanctions." 63 F. Supp.2d at 524 (internal quotations 

omitted). 

However, the sanction pertaining to pro hac vice 

admissions is substantially more severe than the sanction 

imposed under S 1927 because it more directly impacts 

Malakoff's ability to practice. It is also at least arguably 

more damaging to his reputation and that of his firm.9 

Moreover, although Malakoff was clearly on notice that the 

_________________________________________________________________ 

9. There is, no doubt, more than a grain of truth in Shakespeare's 

familiar pronouncement: "he that filches from me my good name . . . 

makes me poor indeed. . .". Othello; Act 3, Scene3.

 26 
court was empowered to make him pay for the increase in 

cost resulting from his vexatious conduct and that Lead 

Counsel would request those costs, it is not as clear that 

Malakoff had notice that the court was considering 

requiring him to attach his scarlet letter to his pro hace vice 

admissions in the District of New Jersey. 

The Magistrate Judge explained this sanction as follows: 

 In addition to the monetary sanction for hisS 1927 

 violations, Mr. Malakoff should be required to answer 

 to the Court for his conduct. One would have hoped for 

 an apology but none was offered. And having read his 

 numerous submissions, having observed his demeanor 

 at oral argument, and having evaluated his concept of 

 professional responsibility, the Court is not satisfied 

 that even a forced apology would have any impact on 

 Mr. Malakoff. 

 Therefore, and pursuant to its inherent power, the 

 Court recommends that, prior to Mr. Malakoff's 

 applying for pro hac vice admission in any subsequent 

 litigation in this district, he be required to attach to the 

 motion papers supporting his admission (1) a

 certification that he has paid the monetary sanction 

 ordered herein, and (2) a copy of this R and R. 

R&R at 35. 

We do not believe that the notice Malakoff received in 

connection with the motion for sanctions under S 1927 

afforded the kind of "particularized" notice and opportunity 

to defend against this unique sanction that due process 

requires. 

In concluding that Malakoff did not have adequate notice 

of this sanction we are particularly mindful of the impact 

that such a sanction would no doubt have on Malakoff's 

ability to practice his trade. Although the sanction is not a 

suspension from practice per se, it certainly raises similar 

concerns, and those concerns ought to inform the 

particularity of notice that must be given to allow Malakoff 

to properly defend against such a sanction. See In re: Tutu 

Wells, 120 F.3d at 381 n.10.("Any suspension from practice 

[and to a lesser degree, severe disciplinary impediments 

 27 
pertaining to admission to practice], even in a jurisdiction 

in which an attorney does not regularly practice, would 

leave an indelible and deleterious imprint on the attorney's 

career, reputation, and future opportunities."). We do not 

believe that the notice afforded Malakoff was sufficient to 

allow the court to impose the non-monetary sanctions that 

were imposed under the court's inherent power. 

Accordingly, that order will be reversed. 

CONCLUSION 

For the reasons set forth above, the order of the District 

Court will be affirmed insofar as it imposes sanctions under 

18 U.S.C. S 1927 requiring Malakoff to pay the increase in 

costs and fees resulting from his conduct. However, the 

order is reversed insofar as it imposes conditions on his pro 

hac vice applications under the court's inherent powers. 

In affirming these sanctions we merely conclude that, 

inasmuch as the district court's finding of bad faith was not 

clearly erroneous, we do not think that the monetary 

sanctions were an abuse of discretion. However, nothing 

we say is intended to detract from the important 

role of objectors' counsel that Judge Rosenn so eloquently 

notes in his concurring/dissenting opinion. See 

Concurring/dissenting Op. at 43. Nor do we in any way 

intend to suggest that forceful advocacy ought to invite 

sanctions in the absence of bad faith, and vexatious 

conduct that unduly increases the costs and burdens of 

litigation. 

 28 
ROSENN, Circuit Judge, concurring and dissenting: 

I concur and join in Part VII of the majority's decision 

that the judgment of the District Court be reversed with 

respect to the sanctions imposed under the court's inherent 

power. Because the evidence does not show that Malakoff's 

actions vexatiously and unreasonably prolonged the 

litigation in violation of 28 U.S.C. S 1927 and there is no 

evidence of or findings that he acted in wilful bad faith, the 

sanctions under that statute also should be reversed. I 

therefore respectfully dissent from the imposition of any 

sanctions. 

I. 

Because of the many lawyers involved and their 

adversarial interests, the underlying case was destined to 

sail on stormy waters. Despite some tensions and 

occasional aberrations in civility, but with considerable 

judicial patience and skill, the case had reached a point for 

settlement consideration. Regrettably, as later resulting 

proceedings revealed, because of a lack of precise 

information and a misreading of the sense and scope of 

some of the ex parte conferences, Malakoff filed a motion 

for Judge Wolin's recusal. Until that moment, no motion, 

complaints, or judicial warnings had been even addressed 

to Malakoff. His motion triggered sanction proceedings 

which are now the aftermath of lengthy underlying 

litigation which has long been settled, appealed, and closed. 

Malakoff substantively challenges the monetary sanctions 

on the ground that he always acted in this litigation in good 

faith and did not multiply the proceedings unreasonably 

and vexatiously. As a lawyer at the bar for approximately 

thirty years, experienced in class action practice and never 

previously sanctioned,1 he contends that the motions he 

_________________________________________________________________ 

1. Malakoff claims that he practiced law for thirty years and has a 

substantial professional interest in class action procedures. He asserts 

that he was a member of this Court's 1985 Task Force on Court 

Awarded Attorneys' Fees, and, as a founding member and board member 

of the National Association of Consumer Advocates, he contributed to the 

Standards and Guidelines for Litigating and Settling Class Actions. See 

176 F.R.D. 375 (1987). He also states that he is a frequent contributor 

to and faculty member of the American Law Institute, the National 

Consumer Law Center, and that his legal rating in Martindale-Hubbell is 

AV. 

 29 
filed were reasonably warranted. Even the Magistrate Judge 

(MJ) in assessing the sanction, stated that "[w]hen viewed 

individually, each single instance of misbehavior by Mr. 

Malakoff might not warrant the sanction arrived at by the 

Court. But considered as a whole, his transgressions 

evidence a pattern of obfuscation and mean spiritedness." 

(Maj. Op. at 21). This sweeping statement, however, is not 

supported by a single finding of fact and does not support 

the conclusion that Malakoff multiplied the proceedings 

vexatiously and acted wilfully in bad faith. Obfuscation and 

mean spiritedness, even if true, are indeed not 

commendable, but they do not amount to a violation of 

S 1927. 

The District Court correctly stated that the purpose of 

S 1927 is to deter intentional and unnecessary delay and 

that in imposing sanctions, a court must find: "(1) a 

multiplication of the proceedings by an attorney; (2) by 

conduct that can be characterized as unreasonable and 

vexatious; with a (3) resulting increase in the cost of 

proceedings; and (4) bad faith or intentional misconduct." 

In re Prudential, 63 F.Supp.2d 516, 520 (D.N.J. 1999). 

There is no evidence whatsoever that Malakoff filed the 

motion to recuse Judge Wolin for the purpose of 

intentionally or unnecessarily delaying the proceedings. 

Malakoff argued to the MJ that his motion to recuse, which 

prompted Lead Counsel's first motion for sanctions, was 

not filed in bad faith and in fact had a colorable basis. 

Judge Walls concluded that any reasonable attorney would 

have understood that Judge Wolin could permissibly 

engage in ex parte communication in a complex class action 

such as In re Prudential. Id. The Court also rejected 

Malakoff's contention that even if ex parte communication 

was permissible, he was entitled to notice of the meetings 

and an opportunity to object. The Court reasoned that 

Malakoff had consented to the Court's ex parte 

communication pertaining to settlement long before his 

recusal motion, and the alleged communications between 

counsel and the court involved settlement of the nationwide 

class action in which Malakoff's clients did not wish to be 

involved. Id. 

Initially, it should be noted that a review of Malakoff's 

 30 
December 3, 1996, recusal motion reveals that his 

objection was not directed to communication between

Judge Wolin and Lead Counsel. His concern was that the 

judge met ex parte with Prudential's Chairman, Arthur F. 

Ryan, and that he met with Select Insurance Regulators 

about the proposed settlement without advance notice to 

Kettle/Krell, Malakoff's clients. Malakoff also believed that 

those meetings went beyond the scope of his original 

consent. Malakoff also complained, inter alia , about the 

Court's failure to allow discovery pertaining to the fairness 

of the proposed settlement.2 

Malakoff may have misconceived the extent of the District 

Court's authority and its justifiable necessity in meeting 

with officers of Prudential in effectuating this complex 

settlement. Malakoff also may not have shown good 

judgment in his motion to recuse, but mistake of judgment 

is not uncommon among lawyers or even judges. A mistake 

of judgment does not per se constitute wilful bad faith. 

Baker Indus. Inc. v. Cerberus Ltd., 764 F.2d 204, 209 (3d 

Cir. 1985). Judge Walls made no specific finding that 

Malakoff filed the motion in bad faith but only concurred in 

the MJ's "conclusions" rejecting Malakoff's contention that 

the motion was objectively reasonable and filed in good 

faith. In re Prudential, 63 F.Supp.2d at 521. 

Understandably, Judge Walls only referred to the MJ's 

conclusions because the MJ, too, made no fact finding of 

bad faith with respect to Malakoff's recusal motion. 

In addition to the foregoing reasons, Malakoff's motion 

for recusal was based on three additional grounds. A fair 

and balanced reading of these grounds, however, renders 

questionable at best any finding of intent to delay, 

vexatiousness, or bad faith. To sanction an attorney for 

questionably egregious conduct unfairly burdens legitimate, 

zealous advocacy, especially in a massive national class 

_________________________________________________________________ 

2. Malakoff was not the only person to object to the fairness of the 

proposed settlement. The docket entries show that there were many 

others, including the Insurance Commissioner for the Commonwealth of 

Massachusetts, the Texas Department of Insurance, the Commissioner of 

Insurance for California, and the state of Florida. Malakoff, however, was 

the only one who filed a motion for Judge Wolin to recuse. 

 31 
action, which in itself is sui juris and requires, as in this 

case, innovative and resourceful procedures. 

In the Pennsylvania proceedings in Rutt v. Prudential, 

Prudential's attorney informed the state judge that Judge 

Wolin was "receptive to a discussion" with the state judge 

regarding potential ethical improprieties regarding Rutt's 

counsel. Malakoff reasonably may have believed that

Prudential's suggestion to contact Judge Wolin implicated 

Judge Wolin in an improper plan to aid Prudential in 

delaying state court trials like Rutt until the class action 

settled. Malakoff believed that evidence produced at the 

state court in Rutt and other state cases could "be crucial 

in evaluating the fairness of the proposed settlement" in the 

federal court. Although later developments revealed that 

Malakoff erred on this basis for recusal, such an error is 

not a violation of S 1927. An attorney who reasonably 

believed in the merits of a motion when filed should not be 

sanctioned. To do so subjects every litigating lawyer whose 

motion is denied the risk of sanctions. 

Malakoff also based his recusal motion on alleged ex 

parte contacts between Judge Wolin and David Gross,

Esquire, counsel for a former Prudential employee named 

David Fastenburg who was accused of destroying material 

Prudential documents. During an October 21, 1996, 

hearing, Judge Wolin appeared to refer to a personal 

conversation with Mr. Gross by stating, "I know Mr.

Fastenburg's lawyer . . . [a]nd Mr. Gross vehemently denies 

on behalf of Mr. Fastenburg that any document was ever 

destroyed by Mr. Fastenburg." The Judge's comments come 

in connection with charges (later proven) that Prudential 

had destroyed material documents. Prudential fired 

Fastenburg for allowing the destruction of documents in 

the office he supervised. In response, Fastenburg sued for 

wrongful termination. In re Prudential, 148 F.3d 283, 343 

(3d Cir. 1998). Although it became clear to some by midDecember, 1996, that Judge Wolin had a legitimate basis 

for his October statement3 and that he had not engaged in 

improper ex parte communications with Mr. Gross, 

Malakoff already had filed his recusal motion on December 

3, 1996, well before his belief was challenged. 

_________________________________________________________________ 

3. Mr. Gross's denial was reported in some newspapers. 

 32 
Malakoff believed that Judge Wolin had engaged in 

improper ex parte communications because the legitimate 

sources of information cited by Judge Wolin never 

mentioned a "vehement" denial by Mr. Gross, and Judge 

Wolin never denied speaking privately to Mr. Gross. 4 Hence, 

while five years later it is clear that Malakoff's perception 

concerning Gross was misplaced, it was not unreasonable 

or made in bad faith. Again, there is no evidence that 

Malakoff's interpretation of these proceedings intentionally 

or vexatiously extended or delayed the proceedings.

Lastly, Malakoff claims he based his recusal motion on 

the District Court's comments at the October 16, 1996, 

conference with state insurance regulators. Malakoff cites 

statements made by the Judge that this was "my 

settlement," that all of those present must "hang together" 

so that they could accomplish what they wanted to 

accomplish for their respective interests, and the Judge's 

comment that "although I wasn't in all the negotiations, I 

wasn't just a pretty face." In the underlying appeal of the 

settlement on the merits, the Court reviewed the claims 

that these statements of Judge Wolin demonstrated his 

bias in favor of the settlement. In re Prudential, 148 F.3d at 

340-45. Moreover, the Court of Appeals stated that the 

District Court made it clear at the same conference that it 

had not yet made any decision regarding the proposed 

settlement or the proposed settlement class. 

Whether the foregoing incident offered a colorable basis 

for a motion to recuse may be arguable, but there is 

nothing about it that warrants the imposition of sanctions 

under S 1927. Malakoff only needed a single reasonable, 

non-vexatious, non-bad faith basis for his recusal motion. 

Malakoff had several colorable bases for the motion. 

Focusing on the District Court's opinion imposing 

sanctions, there is an absence of specific findings of 

intentional misconduct, of bad faith or of any delay or 

extension of the proceedings. The record reasonably

supports the conclusion that Malakoff had a colorable basis 

_________________________________________________________________ 

4. Malakoff alleged improper ex parte communications, and those 

communications, if true, would have been a valid basis for recusal 

regardless of the District Court's further orders against Prudential. 

 33 
for his recusal motion. Moreover, in this high profile class 

action, Malakoff's motion probably served a very useful 

public purpose in removing any mis-perception of the 

impartiality of the court on the part of any of the policy 

holders, including Malakoff's clients and the many others 

who filed objections to the fairness of the proposed 

settlement. There is no evidence that the recusal motion 

justified sanctions under S 1927 and no findings of wilful 

bad faith to support it. Punishment under this statute is 

"sparingly applied" and requires a detailed finding that the 

proceedings were both `unreasonable and vexatious.' " FDIC 

v. Calhoun, 34 F.3d 1291, 1297 (5th Cir. 1994). In this 

case, there is an absence of detailed findings and an 

absence of a "sparing" application of punishment. 

In reviewing the District Court's opinion, it is sometimes 

difficult to distinguish between sanctions imposed under 

S 1927 and those imposed under the inherent power of the 

court. The distinction is crucial, because we hold that the 

disciplinary conduct sanctions under the court's inherent 

powers violated due process. Sanctions under S 1927 are 

compensatory in nature and are intended to compensate 

opposing counsel for vexatious and unreasonable conduct 

that unnecessarily delayed or extended the litigation. Yet, 

in considering "Additional Bases for Sanctions" under 

S 1927, the District Court stated that the MJ"concluded 

that Mr. Malakoff abused the privilege of practicing before 

this Court. His behavior since his arrival on the scene in 

this litigation has been deplorable." In re Prudential, 63 

F.Supp.2d at 521. This sweeping assessment of the 

attorney's conduct, even if it were unchallenged, does not 

support a violation of the statute. This unsupported, 

conclusory statement reflects a mindset of the inherent 

power of the court that colored the District Court's 

judgment with respect to the motion for sanctions under 

S 1927. 

The majority points to the rejection of Malakoff's 

argument on the recusal motion on the appeal to this court 

from the fairness hearings. This court rejected the

argument but it never suggested or stated that the motion 

for recusal was made in bad faith or may have otherwise 

violated S 1927. 

 34 
II. 

Among the subsequent tag-along allegations filed by Lead 

Counsel to bolster their S 1927 cross-motion for sanctions 

was Malakoff's criticism of the fee examiner. This Court 

considered the issues on the appeal of the underlying 

litigation and reiterated Judge Wolin's conclusions that 

Malakoff had "misunderstood the fee examiner's role" and 

had advanced "hypertechnical arguments" in support of his 

motion for disqualification. Judge Walls, in reviewing the 

imposition of sanctions, concluded that Malakoff"may have 

been entitled to object to Mr. Greenberg's ultimate

conclusion." In fact, the objection resulted in a remand by 

the Court of Appeals for further consideration of attorneys' 

fees. Judge Walls, however, concluded that Malakoff had no 

basis for objecting to the appointment. However, such an 

objection in no way violated S 1927; Judge Walls made no 

finding that it did, and neither did the MJ. There is no 

evidence that the objection unreasonably prolonged the 

litigation or that it was made in bad faith. In light of this 

Court's remand to the District Court for further 

consideration of the attorneys' fees, the objection arguably 

had merit. Whether it did or not is insignificant at this 

point; what is significant is that there is no evidence that 

the objection unreasonably multiplied the litigation in 

violation of S 1927. 

Judge Walls then turned to the MJ's observations that 

Malakoff had failed to provide Judge Wolin with courtesy 

copies of his motions before releasing them to the media. 

Malakoff responded that he was advised for the first time in 

Judge Wolin's December 1996 hearing of the judge's desire 

for courtesy copies; up until that point, Malakoff had filed 

pursuant to the local rules and provided copies to the 

media only upon filing. Judge Walls concluded that even if 

the Court were to accept Malakoff's response that he never 

released copies of his motions to the press before their 

filing, he "should have known that the media would contact 

Judge Wolin's chambers upon receipt of any motion papers. 

As an experienced attorney, he should have realized that 

the clerk's office would not deliver courtesy copies to 

chambers immediately." Id. at 521-522. Judge Walls 

asserted that Malakoff's failure to accord Judge Wolin the 

 35 
same respect as the media was unacceptable "and indicates 

that he acted in bad faith." Id. at 522. 

The failure, however, to provide copies of the motion 

papers to the Court may have been arguably thoughtless or 

even discourteous, but clearly not a violation ofS 1927. The 

Court did not find that the failure to supply copies of 

Malakoff's motions to Judge Wolin at the time of filing 

multiplied or prolonged the litigation. It could not have 

done so. In no way did this conduct delay the litigation or 

add to the burden of Lead Counsel as to warrant 

compensatory sanctions under S 1927. Neither the District 

Court nor the MJ could or did make such a finding. 

The District Court then examined Malakoff's 23rd and 

24th affidavits, both filed within three days of each other 

and subsequent to Malakoff's motion for recusal. Malakoff 

claimed that the affidavits were warranted. He argued that 

the 24th affidavit was intended to supplement and correct 

the legal and factual bases for motions then pending before 

the District Court. The District Court, however, concluded 

that the affidavits merely restated arguments previously 

rejected, and repeated allegations of impropriety on the part 

of the trial judge initially presented in Malakoff's recusal 

motion. Quoting the MJ, Judge Walls found that they

"evidence[d] no purpose other than to embarrass the

Court." Id. This is an arguable conclusion. However, there 

is no evidence that they violated S 1927 and the court made 

no findings that they multiplied the proceedings and were 

filed in bad faith.5 

As for Malakoff's problems with the discovery process, 

the MJ in his Report and Recommendation pointed to two 

incidents which he concluded caused "colossal time delays 

and monumental obstacles to the orderly settlement of this 

action." These two incidents consisted of: (1) a reluctance to 

review the thousands of documents in the proceedings and 

_________________________________________________________________ 

5. The majority offers no explanation how the affidavits multiplied the 

litigation and why they justify compensatory compensation to Lead 

Counsel as sanctions under S 1927. Class Counsel, including Lead 

Counsel, already were awarded fees in the sum of $45 million by the 

District Court, conditional on another $45 million in the event 330,000 

claims were filed by June 1, 1997. In re Prudential, 148 F.3d at 332. 

 36 
instead requesting a keyword search of precedential

documents in New York; and (2) a disregard of Judge

Wolin's order to parties seeking to present evidence at a 

fairness hearing to examine the evidence at the movant's 

offices. The MJ found that Malakoff demanded charts

summarizing the evidence. Malakoff, in his defense, argues 

that he only requested a "keyword" search when he saw the 

enormous volume of material at the document depository, 

amounting to hundreds of thousands of documents. As for 

the charts, Malakoff argues that he moved to compel their 

production only after Lead Counsel refused his request that 

they fax them at Malakoff's expense. Judge Walls 

concluded that this conduct "unreasonably multiplied the 

straightforward discovery process and delayed the ultimate 

settlement of the case." In re Prudential, 63 F.Supp.2d at 

522. 

Judge Walls relies on the MJ's conclusions as to the 

effect of these two incidents. Neither he nor the MJ explain, 

however, how an effort on the part of a lawyer to simplify 

and expedite the discovery process by requesting a 

"keyword" search and a chart of the enormous mountain of 

documents multiplied or prolonged the proceedings. It is 

incomprehensible that a request for a "keyword" search of 

precedential documents intentionally multiplied, delayed, or 

extended the litigation. No explanation is given how it did 

do so. The "keyword" search was denied. Had it been

granted, it would have expedited discovery rather than 

delayed it or the settlement. Similarly, it is not 

understandable why the request for charts summarizing 

the evidence or for the "keyword" search resulted in 

"colossal time delays and monumental obstacles" in the 

settlement of the litigation. Id. Again, no finding or 

explanation is given. The requests may have been 

presumptuous, but they could not have violated S 1927. By 

no stretch of the imagination could such requests have 

unreasonably "multiplied the straightforward discovery 

process and delayed the ultimate settlement of the case," as 

the Court concluded. Id. In fact, until Lead Counsel 

endeavored to reinforce their motion for sanctions with 

their tag-along filings, no one had ever complained of 

Malakoff's conduct during discovery and no one had ever 

invoked Rule 11 for sanctions. The supplementary motion 

 37 
is a belated and unreasonable effort to support the motion 

for S 1927 sanctions, and there is no finding that these two 

requests were made in wilful bad faith. 

Finally, we review the action of the District Court with 

respect to Malakoff's Rule 11 and S 1927 motions. Judge 

Walls noted in his opinion that the MJ had examined the 

two motions and had concluded that they were identical, 

only refuted Lead Counsel's December 1999 cross-motion, 

did not present an affirmative ground for sanctions, and 

improperly side-stepped Rule 11's twenty-one day safe 

harbor provisions. Id. at 523. The District Court saw no 

merit to Malakoff's objections to these conclusions, 

although it acknowledged that Malakoff was entitled to 

pursue his S 1927 motion. The Court did not, however, 

believe that Malakoff was "entitled to cut-and-paste his 

Rule 11 motion and transform it into a S 1927 motion." Id. 

The District Court ultimately concluded that the two 

motions were identical, baseless, and filed in bad faith. 

On appeal, Malakoff contends that he was entitled to 

seek both S 1927 and Rule 11 sanctions for the same

conduct, and was entitled to pursue the S 1927 sanctions, 

regardless of whether Lead Counsel took advantage of Rule 

11's safe harbor in withdrawing the offending documents. 

He argues that the legal standard for S 1927 sanctions is 

different and far more stringent than for Rule 11 sanctions. 

He asserts that S 1927 sanctions are warranted against a 

party who unreasonably and vexatiously multiplied the 

proceedings and that a finding of bad faith is necessary. On 

the other hand, Rule 11 sanctions require a more lenient 

standard of proof, no requirement of bad faith, and aims at 

a party who has made unsupported or frivolous arguments 

in the filings. He reasonably believed that the two motions 

satisfied the requisite standards because they alleged: 

 Liaison and Lead Counsel's motion [for sanctions], 

 supporting briefs, affidavits and other papers referred 

 to herein were filed unreasonably and vexatiously in 

 order to multiply the proceedings. Further, these 

 motions and other papers were frivolous. Finally, these 

 papers were filed solely to intimidate Michael P. 

 Malakoff who is objecting to the settlement procedures 

 38 
 used, the settlement, and the request for $90 million in 

 attorneys' fees. 

(A-2617). 

Malakoff concedes that the motions are largely identical 

because they are based on the same conduct. This, he 

argues, does not necessarily render them improper. The 

standards and purposes of each differ. He also denies that 

his motions only refute the cross-motion of Lead Counsel. 

On the contrary, he argues his motions explicitly state that 

Lead Counsel's motion for sanctions was filed frivolously in 

bad faith for an improper purpose, and unreasonably and 

vexatiously multiplied the proceedings. 

We do not need to decide whether the motions were 

identical, whether they contained affirmative grounds for 

sanctions, or whether the S 1927 motion was for the

purpose of side-stepping Rule 11's safe harbor provision. 

We must determine whether the District Court erred when 

it "conclud[ed] that these identical motions were baseless 

and filed in bad faith." Id. at 523. The District Court made 

no findings in this respect; it merely announced its 

conclusion. Id. We do not know from this conclusory

statement whether the motions were baseless in law or in 

fact, and have no explanation of how they violatedS 1927.6 

In summarizing the sanctions imposed on Malakoff under 

S 1927, the District Court "adopt[ed] Magistrate Judge 

Pisano's conclusion that `it is clear that, after viewing his 

entire course of conduct over more than three years before 

this Court, Mr. Malakoff takes an impractical, hypertechnical, and unreasonable approach to litigation.' " Id. 

The purpose of S 1927, however, is not to alter the style, 

_________________________________________________________________ 

6. Judge Walls held that both motions were only defenses to Lead 

Counsel's S 1927 motion and advanced no coherent legal argument as to 

why they should be sanctioned; that by submitting identical papers on 

the two sanctioned motions Malakoff abused the sanctions process. Id. 

The motions are different in that Rule 11 does not require a finding of 

bad faith. Even though they may have been filed as a defense to Lead 

Counsel's motion for sanctions, it is arguable that this constituted an 

abuse of the sanctions process. Moreover, there is no evidence or finding 

that they prolonged the proceedings and were made in violation of the 

Statute. 

 39 
personality, practicality, or even the judgment of a trial 

lawyer. It empowers the punishment of a lawyer who, in 

wilful bad faith, unreasonably and vexatiously multiplies 

the proceedings. 

Significantly, the MJ recommended "that pursuant to

S 1927, Mr. Malakoff should pay to Class Counsel the sum 

of $100,000 and this amount of money is justifiably

significant and will require Mr. Malakoff to suffer sacrifices 

in order to pay." In formulating this harsh and draconian 

sanction, it is obvious from reading the MJ's Report and 

Recommendation that he ignored the statute. The statute 

does not empower a court to fine a lawyer for poor 

lawyering or even misconduct. The statute provides for 

sanctions in the form of compensation for provable loss of 

time and additional expenses incurred by the offended 

lawyer as a result of the alleged unreasonable delaying 

action. The record here is devoid of any evidence proving 

"the excess costs, expenses and attorney's fees" reasonably 

incurred because of Malakoff. 

The majority acknowledges that Judge Walls did not 

make express findings of bad faith and did not rely upon 

any of "the above-specified conduct in particular, [but] 

based his finding of the requisite bad faith and vexatious 

conduct on the totality of the campaign Malakoff waged 

during the course of this litigation." (Maj. op. at 21). 

Notwithstanding, it adopts the "conclusion" reached by the 

MJ and the District Court. (Maj. op. at 22). However, 

Malakoff and his clients were captives of the order

consolidating their state cases in the New Jersey federal 

court.7 Malakoff respectfully and professionally satisfied the 

procedures and tools for objection provided by statute and 

the rules of court. Falling back on the "totality of the 

campaign" in lieu of specific findings of wilful bad faith and 

evidence of excess costs and time incurred by Lead Counsel 

is not, in my opinion, an acceptable basis for sanctions 

_________________________________________________________________ 

7. Prudential's conduct had been under investigation for several years. 

Malakoff filed suit in behalf of his clients in two state courts. Malakoff 

did not appear in the New Jersey District Court until after the Judicial 

Panel on Multidistrict Litigation centralized all the cases before Judge 

Wolin on August 3, 1995. 

 40 
under a penal statute and ignores the "detailed finding" 

required under FDIC v. Calhoun, supra at 34. 

It appears clear that the MJ was influenced by his 

mindset on the inherent power of the court. This is shown 

by his statement just prior to the MJ's determination to 

impose monetary sanctions pertaining to Malakoff's 

behavior. Yet, the MJ acknowledges that "[w]hen viewed 

individually, each single instance of misbehavior by Mr. 

Malakoff might not warrant the sanction arrived at by the 

Court." (Maj. op. at 21) Also significant, Lead Counsel never 

introduced evidence of increased costs and time to support 

their cross-motion for sanctions. Moreover, this court has 

stated that before a court can order the imposition of 

attorneys' fees under S 1927, it must find bad faith on the 

part of the offending attorney that is wilful. Zuk v. Eppi of 

the Med. Coll. of Pa., 103 F.3d 294, 297 (quoting Williams 

v. Giant Eagle Mkt., 883 F.2d, 1184, 1191 (3d Cir. 1989)). 

There are no such findings and no basis for them. 

III. 

Finally, I think a reviewing court should carefully note 

the role of an objecting lawyer, especially in as complex and 

massive class action as was this. Malakoff opposed a large 

battery of lawyers intent on reaching a settlement and the 

payment of huge fees. Class actions are unique, each is 

different, and here many state and federal actions were 

consolidated for disposition. An objecting lawyer should not 

be expected to be a quiescent, listless participant in the 

proceedings without expressing contrary view or theories; 

the lawyer should have reasonable leeway for expression 

and argument.8 In another class action, this Court recently 

_________________________________________________________________ 

8. Malakoff concedes that he was a zealous advocate but denies that he 

acted in bad faith. Amicus Curiae Public Citizen Litigation Group argues 

that objectors like Malakoff play a vital but difficult role in class 

action 

settlements. Public Citizen argues that objectors should be encouraged, 

not chilled, because of the beneficial role they play. Objectors and their 

counsel pursue legitimate and important goals by seeking to block or 

significantly improve class settlements. "Objecting is often the only way 

to protect some class members' interests, even if class members have the 

opportunity to opt out of the class." Amicus Br. at 10-11. 

 41 
noted some of the uncertainties and difficulties that beset 

the court in litigation where most of the parties are not 

personally represented. We stated that there is a 

recognition 

 that in the class action context there is no way for"the 

 class" to select, retain, or monitor its lawyers in the 

 way that an individual client would, and because of 

 doubts that a typical lead plaintiff . . . is a terribly good 

 agent for the class. 

In re Cendant Corp. Litig., 264 F.3d 201, 282 (3d Cir. 2001). 

Because of the conflicting interests between Lead 

Counsel and this extremely large class over fees to be 

derived from the settlement, there is a high degree of 

professional responsibility that they owe a largely absent 

class who depend on lawyers they never saw or retained. 

The degree of responsibility is further enhanced in this case 

because the class consists of ordinary policy holders and 

not sophisticated institutions or investors. Therefore, a 

lawyer with objector status plays a highly important role for 

the class and the court because he or she raises challenges 

free from the burden of conflicting baggage that Class 

Counsel carries. The objecting lawyer independently can 

monitor the proposed settlement, costs, and fees for Class 

Counsel and, thus, aid the court in arriving at a fair and 

just settlement for the members of the class who 

individually are largely unrepresented. 

When objecting counsel raises pertinent questions 

concerning the conduct of Lead Counsel, the terms of the 

proposed settlement, and the costs and fees to be paid from 

the settlement fund, he or she not only renders a service to 

the class, but also aids the court. The record reasonably 

supports the conclusion that Malakoff's objector status had 

the wholesome effect of providing a careful scrutiny of the 

fairness of a gigantic settlement affecting millions of 

policyholders nationwide. He indisputably enhanced the 

amount of the settlement, and secured a reconsideration of 

class counsel fees. 

After all, Class Counsel has very little communication 

with the members of the class and knows little about them 

individually. The members of the class play little or no role 

 42 
in the selection of lead or liaison counsel. Defendants' 

counsel and Class Counsel reach a point where they are 

cooperating in an effort to consummate the settlements. 

Even the court at this point may be inclined to favor 

settlement of a huge, complex action, and the general 

atmosphere becomes largely cooperative. 

Under such circumstances, the motions and arguments

of an objecting lawyer understandably may be discordant 

and disagreeable, but not necessarily unreasonable. The 

objections may be worthy and, at least useful because, as 

the distinguished historian, Allan Nevins, wrote many years 

ago, from the conflict of ideas comes crystallization of 

thought. Objections serve a highly useful vehicle for the 

members of the class and the public generally; they require 

consideration by the court and its disposition of them 

usually provides reassurance that the settlement and the 

fees approved are fair and just. 

Thus, I believe that as counsel for objecting plaintiffs, 

Malakoff played a useful and even constructive role in this 

litigation. He may have been overzealous and tenacious, 

but Lead Counsel, as experienced, seasoned class action 

lawyers, are no shrinking violets. They do not complain that 

Malakoff was deceptive or mendacious. On the other hand, 

his services, acknowledged by Lead Counsel, enhanced the 

class settlement by $50 million, and he succeeded in 

having this Court on appeal remand for further 

consideration the $90 million fee provided by the 

settlement. 

For the reasons set forth above, I would also reverse the 

imposition of the severe sanctions imposed on Malakoff 

under S 1927. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 43