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. e du/thir dc ir c uit_2002/39Filed 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 Judg e of the United States Court of Appeals for the Seventh Circuit, si tting 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.

2OPINION OF THE COURT

McKEE, Circuit Judge:

This appeal arises from numerous state and federal class

actions that the Judicial Panel on Multi-district L itigation consolidated for disposition in the United States D istrict Court for the District of New Jersey. This massive, national class action involved the claims of over eight mill ion policy holders of Prudential Life Insurance Company who we re represented by many lawyers, including the appellan t, Michael P. Malakoff and his law firm, Malakoff, Doy le and Finberg. The class action eventually reached a sett lement. However, on the eve of settlement, Lead Counsel for the plaintiffs asked the court to sanction Malakoff bas ed upon his conduct during the course of the litigation.

After issuing a rule to show cause on the motion fo r sanctions, the District Court referred the matter t o a magistrate judge who issued a Report and Recommenda tion ("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. Ju dge Walls approved the R and R with modifications and d irected the magistrate judge to recalculate the monetary sa nctions according to the precise costs and expenses resulti ng from

the sanctionable conduct. See In re The Prudential Insurance Co., 63 F. Supp. 2d 516 (D. N.J. 1999). T his appeal followed imposition of the modified sanction s. For the reasons that follow, we will affirm in part and reverse in
part.

I. Background.

In 1995, Michael P. Malakoff, a Pennsylvania attorn ey experienced in class action litigation, brought two statewide class actions against Prudential Insurance Company of America in Ohio and West Virginia state courts on b ehalf of Prudential policy holders in those states. Prudenti al

removed those class actions to federal district cou rt and Malakoff's subsequent motions to remand were denied . The

3Judicial Panel on Multi-District Litigation central ized those

and other class actions that had been brought on be half of Prudential policy holders before Judge Alfred M. Wo lin of

the United States District Court for the District o f 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, Amen t, 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 ac tions should be litigated in statewide classes or as a na tional class. Malakoff argued that the two state class act ions 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 retaine d objector status in the nationwide action. On Decemb er 2, 1996, Malakoff filed an "emergency" motion to recus e Judge Wolin. A few days later, Lead Counsel filed a cross -motion for sanctions predicated primarily on Malakoff's re cusal motion. Judge Wolin referred the sanctions motion t o then Magistrate Judge Joel A. Pisano. Following Malakoff 's voluminous objections to the proposed settlement, L ead Counsel supplemented their cross-motion for sanctio ns with citations to numerous other instances of Malak off's alleged sanctionable conduct.

As proponent of the statewide claims for Ohio and W est Virginia, Malakoff raised many objections to the pr oposed national class settlement, and to Lead Counsel's re quest for $90 million in attorneys' fees. In March, 1997, Mal akoff

filed his own motion to sanction Lead Counsel under 28 U.S.C. S 1927. Shortly thereafter, Malakoff filed a n additional motion for sanctions, this time relying upon Fed. R. Civ. Proc. 11, but alleging the same conduct tha t formed the basis of his S 1927 motion. See A-2818, 3485. O n 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 issue d an order and opinion awarding attorneys' fees to Lead Counse l. 962 F. Supp. 572 (D. N. J. 1997).

4We affirmed Judge Wolin's approval of the settlemen t on

appeal, but vacated the attorneys' fee award and re manded

for further consideration. See In Re Prudential Sal es Practice Litig., 148 F.3d 283 (3d Cir. 1998). On re mand,

Lead Counsel moved for an interim fee award which Malakoff opposed. Lead Counsel also moved for sanct ions against Malakoff based upon statements Malakoff mad e in his opposition documents. However, that request for sanctions was withdrawn within the "safe harbor" pe riod.1 See A-3192, 3485. Nonetheless, a week later Malakof f 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 tha t 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 s anctions to Magistrate Judge Pisano. Judge Pisano issued an R and R recommending that sanctions be imposed against Malakoff. The sanctions included a compensatory pay ment of $100,000 to Lead Counsel under 28 U.S.C. S 1927, and a non-monetary requirement that Malakoff attach a c opy of

that R and R as well as a certification that he had paid the attorneys fees ordered therein, to all future motio ns for pro

hac vice admission in the United States District Co urt for the District of New Jersey. See A-3485A(35).

Malakoff objected to the R and R. Judge Wolin recus ed 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 Ne w Jersey. Judge Walls substantially adopted Judge Pisano's re port and rejected Malakoff's objection; however, Judge W alls remanded the recommendation for compensatory paymen t to Lead Counsel of $100,000 to Judge Pisano. The re mand was for a determination of the precise amount of ex cess fees and expenses lead counsel incurred as a result of

___________________________________________________ ______________

1. For a discussion of the 21 day "safe harbor" pro vision 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).

5Malakoff's sanctionable conduct. Judge Walls also r educed

the time that Malakoff would have to attach the R a nd R and the aforementioned certification of compliance to subsequent motions for pro hac vice admission to fi ve years from the date of the first motion for pro hac vice admission. On remand, Malakoff and Lead Counsel agreed that th e compensatory sanction award be reduced to $50,000 i f we uphold the sanctions on appeal. That modification w as approved, and Malakoff filed this appeal.

We are only concerned with the propriety of the san ctions imposed by the District Court against Malakoff foll owing the protracted and hard-fought consolidated class a ction proceedings. Malakoff contends that his conduct did not warrant monetary or disciplinary sanctions, and tha t sanctions were imposed without adequate notice or "opportunity to be heard."3 Issues pertaining to th e adequacy of Malakoff's "opportunity to be heard," a re questions of law subject to plenary review. In Re T utu Wells Contamination Litig., 120 F.3d 368, 383 (3d Cir. 19 97). However, we review whether the facts warrant the imposition of monetary and disciplinary sanctions f or an abuse of discretion. Accordingly, we will only reve rse the

District Court if the sanctions resulted from an unsupported finding of fact, an errant conclusion o f 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 con trol the course of litigation. Although we will discuss the legal principles underlying these sanctions in more detai l below, it will be helpful to preliminarily set forth the u nderlying legal principles for imposing sanctions. We will th en examine Malakoff's conduct to determine if the sanc tions were appropriate here.

___________________________________________________ ______________

3. Malakoff argues that he was denied the opportuni ty to be heard in opposition to the sanctions motion because of the D istrict Court's denial of his discovery requests regarding submissions mad e after he filed his recusal motion. We have previously held that Malako ff was not entitled to more discovery. See Prudential Sales Practices L itig., 148 F.3d at 343-

45.

6In Hackman v. Valley Fair, 932 F.2d 239 (3rd Cir. 1 991)

we noted that:

a finding of willful bad faith on the part o f the offending lawyer is a prerequisite . . . [fo r imposing sanctions under 28 U.S.C. S 1927]. Bad faith is a

factual determination reviewable under the c learly erroneous standard. Once a finding of bad fa ith 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 t he court's inherent authority to control litigation wi ll usually require a finding of bad faith.4 In Chambers v. NAS CO, Inc., 501 U.S. 32, 45-46 (1991) the Supreme Court stated that a court has the inherent authority to impose sancti ons when an attorney has acted "in bad faith, vexatious ly, wantonly, or for oppressive reasons." We also revie w 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 C ir. 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 Republi c of Philippines v. Westinghouse Electric Corp., 43 F.3d 65, 74 n.11 th at 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 p ower 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 f irst finding bad faith because, as we discuss below, the district court he re implicitly made such a finding, and that finding was not clearly er roneous.

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

affidavits Malakoff filed in March of 1997; (5) Mal akoff's demand for a "keyword" search of discovery document s provided by Prudential as well as a demand that Cla ss Counsel provide him with charts summarizing evidenc e to be used at the fairness hearing; and (6) sanctions motions

Malakoff filed under Rule 11 and S 1927. We will ex amine

each of these in turn.

(1). The Motion to Recuse.

Malakoff filed a motion to recuse as an emergency m otion on December 2, 1996. He alleged that Judge Wolin ha d improper ex parte communications with various peopl e involved in the nationwide litigation, that Judge W olin

obstructed reasonable access to documents related t o the fairness of the settlement and that Judge Wolin had shown partiality towards Prudential and towards the fairn ess of the settlement. App. at 833-859.

Malakoff rested the motion primarily upon the charg e that Judge Wolin had improper ex parte meetings wit h Prudential's President and counsel on August 12, 19 96 at a settlement conference, and an October 16, 1996, o n the record conference with certain state insurance regu lators. Finally, Malakoff alleged that Judge Wolin had impr operly 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 Cla ss 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 Wo lin denied the recusal motion after that hearing and ar gument 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 an d fairness hearing. See 148 F.3d at 342-34.

8In sanctioning Malakoff under S 1927, Judge Walls

rejected Malakoff's contention that the recusal mot ion had

a colorable basis in fact and was not filed in bad faith. Rather, Judge Walls concluded that "Malakoff intent ionally 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 th e following three bases for recusal demonstrate that his

motion for recusal had a colorable basis and was no t 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 tr ial judge, Prudential's counsel, Hirshman, argued for the disqualification of a lawyer named Miller who repre sented the Rutts. According to Malakoff, Hirshman told the state trial judge that Judge Wolin had information for th e court regarding Miller and that Judge Wolin "is receptive to a discussion with Your Honor by telephone about his v iews." Malakoff's Br. at 13. Malakoff alleges that Hirsham told the state judge that Judge Wolin had "information to sh are" and suggested that the state judge call Judge Wolin . Id. at 13-14. The state court trial judge purportedly decl ined Hirshman's invitation, saying that it would be "hig hly improper" for him to contact Judge Wolin. Id . at 1 4.

___________________________________________________ ______________

5. The District Court correctly noted, "the Manual for Complex Litigation acknowledges that federal judges may meet separatel y with parties for confidential settlement conferences. Finally, the C ode of Judicial Conduct for United States Judges permits separate c onversations with parties with the consent of counsel who are authori zed to object. This Court concludes that any reasonable attorney would have understood that Judge Wolin could permissibly engage in ex par te communication in a complex class action such as In re Prudential." 6 3 F. Supp.2d at 520.

The district court found that Malakoff waived entit lement to notice of, and opportunity to object to, such meetings because he had consented to ex parte communications relating to settlement l ong before he filed the

recusal motion. Id.

9According to Malakoff, the whole purpose of this co ntact

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 cour tesy," however, he categorically denied knowing the state judge ever attempting to contact him, or even caring abou t the outcome of the Rutt case. App. at 891-92. Nothing o n this record contradicts Judge Wolin's assertion. To the contrary, Malakoff's own brief now belies his charge that Jud ge Wolin attempted to intervene, and affirms that what actually happened was "that Prudential attorneys ur ged [the state trial judge] to contact Judge Wolin." Ma lakoff's Br. at 38. Therefore, Malakoff's charge was not bas ed on anything Judge Wolin said or did. Rather, it was ba sed upon something Prudential's counsel tried to get th e 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 attem pting to influence the state court proceedings in Rutt . . . [and Malakoff's claims to the contrary] are clearly with out

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 bas ed this allegation of Judge Wolin's impropriety upon a stat ement Judge Wolin made at an October 16, 1996 hearing. Du ring 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 allege d 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 allege dly allowing the destruction of documents in offices he supervised, and Fastenberg responded by suing Prude ntial for wrongful determination. The alleged document

10destruction was a matter of public record. Moreover

,

Fastenberg's termination and his suit against Prude ntial had been widely reported in the press. Judge Wolin explained to Malakoff at the recusal hearing that h e learned of Fastenberg's denial in the press and through a l etter written to him by Lead Counsel for Prudential in a related case. Nothing on this record contradicts that. Ther e was no improper communication by Judge Wolin with Fastenbe rg'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 accelera ted 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 recu sal

motion had a colorable basis and was not filed in b ad faith is his charge that Judge Wolin had an October 16, 1 996 on the record conference with state insurance regulato rs during which Judge Wolin indicated that he favored a national settlement of the policyholders' claims ag ainst Prudential. In Malakoff's view, the court's indicat ion that it favored a settlement showed that it was partial to Prudential and could not, therefore, be an impartia l, objective reviewer of the settlement. Malakoff rest s this claim upon the following statement of Judge Wolin a t the October 16 hearing:

I'd like to be on the same page with you, re alizing that we all have the same constituency. When I sa y `constituency,' I'm talking about the claima nts, 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 wan t to

make sure that claimants are . . . remediate d properly.

Malakoff's Br. at 41. Judge Wolin also referred to the proposed settlement as "my settlement" and said "al though I wasn't in all of the negotiations, I wasn't just a pretty

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

remarks have the significance that Malakoff attempt s to attach to them. Moreover, Malakoff does not bother to mention that Judge Wolin was careful to add the fol lowing

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 e vidence.

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 regardi ng 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"re view the application for attorneys' fees and expenses" f or 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 Ord er appointing Greenberg and on November 15, 1996, Mala koff 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 emerge ncy motion seeking to have Greenberg's appointment vaca ted. Malakoff alleged that Greenberg's appointment had b een ex parte and in violation of Fed. R. Civ. P. 53(d)(1), because the first meeting of the parties and their attorney s was not held within 20 days of the order appointing the exa miner.6

___________________________________________________ ______________

6. Fed. R. Civ. P. 53(d)(1) requires the fee examin er to conduct a "first meeting of the parties or their attorneys to be hel d within 20 days after the order [appointing the examiner] and notify the parties or their attorneys." Malakoff says that when he requested th at 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?"

12Judge Wolin denied Malakoff's motion to vacate

Greenberg's appointment. The judge found that Malak off had waived his right to object by (1) not objecting at the time Greenberg was appointed; (2) writing to Greenb erg nine days after Greenberg was appointed proposing t hat they collaborate in efforts to obtain materials rel ated to the application for attorneys' fees; (3) waiting two mo nths before seeking to vacate Greenberg's appointment, a nd (4) failing to provide any reason for waiting those two months. App. at 2501(4). Judge Wolin also found that Malako ff's Rule 53 objections were "hyper-technical" since "Gr eenberg met with the parties five days prior to the date of the November order and 27 days after the date of the No vember order." Id. at 2501(1)-2504(14)(a)).

In his "sanctions opinion," Judge Walls concluded t hat Malakoff had no basis for trying to vacate Greenber g's appointment because Malakoff had initially approved Greenberg's appointment. 63 F. Supp.2d at 521. More over, 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 Judg e Wolin with courtesy copies of motion papers in imposing sanctions. Judge Walls noted that:

Magistrate Judge Pisano indicates that Mr. M alakoff repeatedly failed to send courtesy copies of motion papers to Judge Wolin's chambers. This defic iency was specifically addressed by Judge Wolin in Mr. Malakoff's December 13, 1996 motion to recus e.

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

Malakoff submits that Judge Walls found that his fa ilure to provide courtesy copies of his various motions t o Judge

Wolin was sanctionable conduct. He contends he did not provide courtesy copies because, until that time, h e had always filed his motions in accordance with local r ules and Judge Wolin never had objected to that practice. Un der local rules, the clerk of court forwards filings to the

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

end of the recusal hearing that Judge Wolin chastis ed him for not providing the courtesy copies of filings. M alakoff asserts that Judge Walls was therefore wrong in fin ding that his failure to provide courtesy copies was san ctionable.

However, Judge Walls did not consider Malakoff's ge neral failure to provide courtesy copies to Judge Wolin i n imposing sanctions. Rather, Judge Walls considered Malakoff's release of his recusal motion to the pre ss 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 le aked to the press in advance of their receipt by the Court. At least three major newspapers sought comment from this Cou rt as to applications, the existence of which the Cour t was unaware." App. at 1492. Malakoff claims that severa l days after he filed the motion to recuse, he was contact ed by the press and provided copies to them. Thus, because he complied with the rules of court and because the pr ess 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 del iver courtesy copies to chambers immediately. [Malakoff' s] failure to accord Judge Wolin the same respect as t he media was `unacceptable' and indicates that he acte d 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, Mala koff filed his "Tenth Affidavit," alleging that an impro per ex parte communication occurred on December 30, 1996 between Judge Wolin, Karen Suter, Deputy Attorney General for the New Jersey Department of Banking, a nd Anita Kartalopolous, Deputy Commissioner for that Department. Subsequent to the filing of Malakoff's "Tenth

14Affidavit," Suter and Kartalopolous filed affidavit s 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. Howe ver, 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 Judg e Wolin.

However, despite the affidavits from Suter and Kartalopolous, Malakoff filed a "Corrected Tenth Af fidavit," on February 17, 1997, which was identical to the"Te nth Affidavit" except that it changed, without explanat ion, the date of the alleged ex parte communication from Dec ember 30th to December 16. Then, on March 14, 1997, Malak off filed his "Twenty Third Affidavit," in which he onc e again alleged that an improper ex parte discussion occurr ed on December 16, between Judge Wolin, Suter and Kartalopolous. Three days later, Malakoff filed his "Twenty Fourth Affidavit," in which he repeatedly accused J udge Wolin of catering to the interests of Prudential an d Class

Counsel.

Judge Walls found that the 23rd and 24th affidavits merely restated already rejected arguments, attempt ed to explain Malakoff's reasons for filing motions that had already been denied, and repeated allegations of Ju dge Wolin's impropriety that Malakoff had made in his r ecusal motion. Judge Walls also found that the 24th affida vit was not filed in connection with any new or pending mot ion. Consequently, Judge Walls concluded that Malakoff f iled the 23rd and 24th affidavits for the sole purpose o f 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 Mal akoff.

The first involved Malakoff's demand for a "keyword " search of documents produced during discovery. On October 28, 1996, Class Counsel and Prudential rece ived

15Judge Wolin's order conditionally approving the set tlement

of the consolidated class action. Judge Wolin made available to all policyholders who signed a Stipula tion of Confidentiality "deposition transcripts and attache d exhibits as well as . . . all other documents gener ated in

this lawsuit."

According to Class Counsel, over 1,000,000 pages of documents, 160 computer diskettes, 500 audio and vi deo tapes, hundreds of interviews with current and form er 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, Mala koff did not review the materials. Rather, he demanded additional discovery despite not having reviewed th e discovery material already available. On December 3 0, 1996, after Malakoff complained about not being abl e to review the documents, Judge Wolin suggested that he go to

Class Counsel's offices in New York for document re view. Malakoff maintains that he asked Judge Wolin to dir ect Class Counsel to allow him (Malakoff) to use the cl ass keyword search facility because only a few of the m any documents were relevant to Malakoff's objections. J udge Wolin denied that request as unfair, and Malakoff s ent an associate to Class Counsel's office. However, the a ssociate only demanded that Class Counsel conduct keyword searches for him. He did not review any discovery m aterial.

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 Couns el to use demonstrative evidence at the fairness hearing, and requiring Class Counsel to provide an adequate oppo rtunity for any interested party to inspect the demonstrati ve evidence at Class Counsel's New York office. Judge Wolin's

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

inspection does not create any obligation [on Class Counsel] to provide any copies of such demonstrativ e evidence to any person inspecting the same."

Malakoff asserts that it was not feasible for him t o review this demonstrative evidence in New York, and he the refore requested that Prudential and Class Counsel fax cop ies of the charts to him. According to Malakoff, Prudentia l complied with his request, but Class Counsel refuse d and demanded that he go to New York to review the chart s. Rather than doing that, Malakoff filed yet another "emergency" motion on February 19, 1997. Judge Woli n denied that motion finding, among other things, tha t Malakoff had not shown why compliance with the prev ious order allowing inspection was not feasible. Judge W olin was

also concerned that Malakoff waited until the eleve nth hour to raise the issue (the fairness hearing was set fo r 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 agr eed to by

counsel and the Court in this action. That n o other attorney objected to the process or sought s pecific concessions from the court or opposing couns el demonstrates that the procedure was unobject ionable. Mr. Malakoff's resistance to the discovery p rocess and his attempts to exempt himself therefrom unr easonably multiplied the straightforward discovery pro cess 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, C lass Counsel cross-moved for sanctions against Malakoff under S 1927, and then, on the same day as the fairness h earing, supplemented their cross-motion for sanctions. In response, Malakoff filed his own motion for sanctio ns against Class Counsel under S 1927, and shortly the reafter, he served a motion for sanctions against Class Coun sel

17under 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 hi s 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 Judg e Pisano also concluded that Malakoff's Rule 11 motio n 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 cohe rent legal argument as to why [Class Counsel] should be sanctioned." 63 F. Supp.2d at 523. Inasmuch as Mala koff conceded that the legal standards for S 1927 and Ru le 11 are different, Judge Walls concluded that these dup licitous

motions demonstrated that Malakoff had abused the sanctions process.7 Id. Judge Walls concluded that

Malakoff's "identical motions were baseless and fil ed 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 con duct cases in any court of the United States or a ny 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 beca use of

such conduct.

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

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7. For example, S 1927 sanctions are applicable onl y 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 imprope r purpose and requires only a showing of objectively unreasonable conduct. Fellheimer, Eichen & Braverman v. Charter Technologies, Inc., 57 F.3d 12 15, 1225 (3d Cir. 1995).

18discretion in managing litigation before it, the pr incipal

purpose of imposing sanctions under 28 U.S.C. S 192 7 is the deterrence of intentional and unnecessary delay in the proceedings." Zuk v. Eastern Pennsylvania Psychiatr ic Institute, 103 F.3d 294, 297 (3d Cir. 1996) (citati on 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 proc eedings; (2) in an unreasonable and vexatious manner; (3) th ereby increasing the cost of the proceedings; and (4) doi ng so in bad faith or by intentional misconduct. Williams v Giant Eagle Markets, Inc. 883 F.2d 1184, 1191 (3rd Cir. 1 989). "[B]efore a court can order the imposition of attor neys' fees under S 1927, it must find willful bad faith on the part of the offending attorney." Zuk, 103 F.3d at 297. "Ind ications of this bad faith are findings that the claims adva nced were meritless, that counsel knew or should have known t his, 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 i mpose 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 limit ed to

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

IV. Sanctions Pursuant to the Court's Inherent Powe r.

In addition to the monetary sanctions imposed under S 1927, the District Court also imposed disciplinar y sanctions. These sanctions required Malakoff to cer tify that he had paid the monetary fine, and attach a copy of the R and R to all applications for admission pro hac vic e for five years from the date of the first such application. This sanction was imposed under the court's inherent pow er. Moreover, the sanctioning order also provided that, if Malakoff were to be sanctioned again within the fiv e year period, the five year limitation would disappear an d he would thereafter be required to submit the proof of payment, together with a copy of the R and R, with every

19application for pro hac vice admission to the Distr ict Court

for as long as he practiced law. In re Prudential I ns. Co. of Am. Sales Prac. Litig., 63 F. Supp. 516, 525 (D. N. J. 1999).

"It has long been understood that certain implied p owers must necessarily result to our Courts of justice fr om the nature of their institution, powers which cannot be dispensed with in a Court, because they are necessa ry to the exercise of all others." Fellheimer, Eichen & B raverman, 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))."A mong 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 t o a court's inherent power include

cases where a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. . . . T he imposition

of sanctions in this instance transcends a c ourt's equitable power concerning relations between the parties and reaches a court's inherent power to police itself, thus serving the dual purpose of vin dicating judicial authority without resort to the mor e drastic sanctions available for contempt of court an d making the prevailing party whole for expenses caus ed 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 i s also

sanctionable under statute or rules of court. Chamb ers, at 45. However, "[b]ecause of their very potency, inhe rent 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 r ules of court or statutes also provide a vehicle for sancti oning misconduct, resort to these inherent powers is not preferred when other remedies are available. Moreov er, the analysis in Chambers "leads to the conclusion that if statutory or rules-based sanctions are entirely ade quate,

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

Gregory P. Joseph, Sanctions: The Federal Law of Li tigation Abuse, 428 (3rd ed. 1999) (hereinafter Sanctions Tr eatise). Therefore, "[g]enerally, a court's inherent power s hould be

reserved for those cases in which the conduct of a party or an attorney is egregious and no other basis for san ctions exists." Martin v. Brown, 63 F.3d at 1265.

V. The Court did not Abuse its Discretion in Imposi ng 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 absen ce of a finding of bad faith. However, that finding need not be explicit. An implicit finding of bad faith will sup port sanctions just as well so long as it is not an abus e of discretion, not based upon clearly erroneous factua l findings, and not based upon an error of law. Baker

Industries at 209.

Here, Judge Walls did not make an express finding o f bad faith. Nor did Judge Walls rely upon any of the abo vespecified conduct in particular. Rather, he based h is 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. T he

District Court assessed that conduct in its totalit y in imposing sanctions and affirming the findings of th e Magistrate Judge. In his R and R, the Magistrate Ju dge explained:

[w]hen viewed individually, each single ins tance of misbehavior by Mr. Malakoff might not warran t the sanctions arrived at by the court. But consi dered as a whole, his transgressions evidence a pattern of obfuscation and mean spiritedness. Thankfull y, it is

not often that the Court encounters such beh avior, 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 sa nctions. See In Re Prudential 63 F. Supp. 2d at 521 ("The Magist rate

21Judge concluded that Mr. Malakoff `abused the privi leges of

practicing before this Court. His behavior since hi s 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 t hat `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 P rudential Insurance Co., 63 F. Supp 2d at 518. This record re adily 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 sta ndard 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 as sessing attorneys' fees against counsel under sectio n 1927 is a

matter for the district court's discretion.

Baker Industries, 764 F.2d at 209-10 (citations omi tted). Accordingly, we do not second-guess the District Co urt that was managing the front lines of this massive class action unless its findings were clearly erroneous or its e xercise of decision arbitrary or unjustified.

The course of conduct here allows for only one conclusion, and it is the one reached by the Magist rate 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 erron eous. 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 neces sitated responses by Class Counsel and required Judge Wolin to write a thirteen page opinion in support of his ord er denying the motion. His demand for a key word searc h (after he failed to make any efforts to review the documents

22available 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 ag ain necessitated responses by Class Counsel and once ag ain meant that Judge Wolin had to write an opinion and order denying that motion. His filing of two identical s anctions motions, despite the fact that they were filed unde r different provisions having different standards of proof, nec essitated 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 affidavit s, viz., New Jersey Deputy Attorney General Suter and New Jersey Deputy Insurance Commissioner Kartalopolous, felt compelled to respond to the erroneous allegations M alakoff made in the affidavit of improper ex parte discussi ons with Judge Wolin.

The sanctions that were imposed were a direct resul t of

that vexatious conduct and not an abuse of discreti on. The only real question with regard to those sanctions i s whether Malakoff was properly afforded due process before t he 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 impos ed 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 impose d 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 o f the precise sanctioning tool that the court intends to employ." Id. An opportunity to be heard is "especially impor tant" where a lawyer or firm's "reputation is at stake," because

23sanctions "act as a symbolic statement about the qu ality

and integrity of an attorney's work -- a statement which may have a tangible effect upon the attorney's care er." Id.

at 1227.

Here, Malakoff did receive notice in the form of th e motion for sanctions that Lead Counsel filed on Dec ember 10, 1996. Moreover, on December 10, 1996, plaintiff 's liaison counsel, co-lead counsel and executive coun sel 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 sanctio ns would be sought

upon the firm of Malakoff, Doyle & Finley, P .C., for unreasonably and vexatiously multiplying the proceedings in this matter, and seeking paym ent by Malakoff, Doyle & Finley, P.C. of the excess costs, expenses and attorneys' fees reasonably incu rred to respond to the application of Kittle and Kre ll 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. Fr iedman also referred only to sanctions under 28 U.S.C.S 19 27 without any reference to the court sanctioning Mala koff under its inherent powers.

In upholding the Magistrate Judge's determination t hat Malakoff had not been denied due process, Judge Wal ls 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 th e Court, all parties were given ample notice of what beha vior was in dispute. Each side's motion papers and af fidavits set forth in detail why it believes actions take n by the other party's attorneys should result in san ctions. Furthermore, the questions posed at oral arg ument afforded to the parties an inkling of the Co urt's concerns about what behavior might be object ionable. Finally, each party was able to listen at or al argument

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

was on particularized notice of what behavio r and

actions were at issue.

Class Counsel and Mr. Malakoff were also gi ven at least four opportunities to be heard. First, both sides presented legal arguments in their numerous and lengthy briefs and memoranda accompanying th e various sanctions motions. Second, Mr. Malak off and

Class Counsel both sent to the Court letter memoranda accompanying their submissions regarding the sanctions record. Third, at oral argument, e ach side was given time for a presentation to the Cou rt, and additional time for rebuttal. Finally, at th e end of oral argument, the Court advised the parties that it would

entertain one final letter memorandum from e ach side, so long as each was no longer than five page s. Both took advantage of all four of these opportun ities to present arguments to the Court. Certainly, t he parties have been given meaningful and numerous opportunities to be heard.

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

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

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8. Malakoff argues that the District Court deprived him of due process by refusing discovery regarding record submissions aft er he filed his recusal motions. He argues that those submissions were used to deny the recusal motion and to justify the award of sanction s against him. Yet,

Malakoff chose to demarcate his recusal motion as a n"emergency" motion. In denying discovery, the court merely trea ted Malakoff's motion like the emergency he himself declared it to be, an d afforded it the immediate attention Malakoff's assertion of"emergen cy" 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 tha t 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 w as denied an opportunity to develop a full and complete sanction record. Malakoff's Br. at 54. However, he never explains why this is s o, and we doubt that any explanation is possible given the District Cour t's finding of bad

faith.

25troubled by the propriety of the non-monetary sanct ions

imposed pursuant to the court's inherent powers.

VII. Sanctions Under the Court's Inherent Powers an d

Conditions on Pro Hac Vice Admission.

Malakoff does not challenge the court's authority t o impose the aforementioned conditions on his applica tions 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 sanction s. He claims that he first became aware that the Magistra te Judge was considering requiring him to attach this" scarlet letter" (our term, not Malakoff's) to his pro hac v ice applications only upon reading the July 15, 1999, R and R. Class Counsel argues to the contrary and insists th at Malakoff had ample notice. According to Class Couns el, the issue was raised by Class Counsel at oral argument during the sanctions hearing and again in their post-argum ent

brief.

The Magistrate Judge found that Malakoff was given four opportunities to be heard on the sanctions that wer e being considered. See R&R at 24. Judge Walls found that Malakoff received particularized notice in the orig inal

S 1927 sanctions motion filed in December of 1996. He also found that "[a] survey of the competing sanctions m otions filed over the course of the Prudential litigation further indicates that Mr. Malakoff was on notice to the pa rticular

factors that he had to address if he were to avoid sanctions." 63 F. Supp.2d at 524 (internal quotatio ns omitted).

However, the sanction pertaining to pro hac vice admissions is substantially more severe than the sa nction imposed under S 1927 because it more directly impac ts Malakoff's ability to practice. It is also at least arguably more damaging to his reputation and that of his fir m.9 Moreover, although Malakoff was clearly on notice t hat the

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9. There is, no doubt, more than a grain of truth i n Shakespeare's familiar pronouncement: "he that filches from me my good name . . . makes me poor indeed. . .". Othello; Act 3, Scene3.

26court was empowered to make him pay for the increas e in

cost resulting from his vexatious conduct and that Lead Counsel would request those costs, it is not as cle ar that Malakoff had notice that the court was considering requiring him to attach his scarlet letter to his p ro hace vice admissions in the District of New Jersey.

The Magistrate Judge explained this sanction as fol lows:

In addition to the monetary sanction for hi sS 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 de meanor at oral argument, and having evaluated his c oncept of professional responsibility, the Court is no t satisfied that even a forced apology would have any im pact on

Mr. Malakoff.

Therefore, and pursuant to its inherent pow er, the Court recommends that, prior to Mr. Malakoff 's applying for pro hac vice admission in any s ubsequent 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 19 27 afforded the kind of "particularized" notice and op portunity to defend against this unique sanction that due pro cess requires.

In concluding that Malakoff did not have adequate n otice of this sanction we are particularly mindful of the impact

that such a sanction would no doubt have on Malakof f's ability to practice his trade. Although the sanctio n is not a suspension from practice per se, it certainly raise s 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 p ractice [and to a lesser degree, severe disciplinary impedi ments

27pertaining to admission to practice], even in a jur isdiction

in which an attorney does not regularly practice, w ould leave an indelible and deleterious imprint on the a ttorney's career, reputation, and future opportunities."). We do not

believe that the notice afforded Malakoff was suffi cient to allow the court to impose the non-monetary sanction s 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 D istrict Court will be affirmed insofar as it imposes sancti ons under 18 U.S.C. S 1927 requiring Malakoff to pay the incr ease 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 po wers.

In affirming these sanctions we merely conclude tha t, inasmuch as the district court's finding of bad fai th was not clearly erroneous, we do not think that the monetar y sanctions were an abuse of discretion. However, not hing we say is intended to detract from the important role of objectors' counsel that Judge Rosenn so elo quently notes in his concurring/dissenting opinion. See Concurring/dissenting Op. at 43. Nor do we in any w ay intend to suggest that forceful advocacy ought to i nvite sanctions in the absence of bad faith, and vexatiou s conduct that unduly increases the costs and burdens of litigation.

28ROSENN, Circuit Judge, concurring and dissenting:

I concur and join in Part VII of the majority's dec ision 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 Mala koff's actions vexatiously and unreasonably prolonged the litigation in violation of 28 U.S.C. S 1927 and the re is no evidence of or findings that he acted in wilful bad faith, the

sanctions under that statute also should be reverse d. 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 dest ined to sail on stormy waters. Despite some tensions and occasional aberrations in civility, but with consid erable judicial patience and skill, the case had reached a point for settlement consideration. Regrettably, as later res ulting 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 mo tion, complaints, or judicial warnings had been even addr essed to Malakoff. His motion triggered sanction proceedi ngs which are now the aftermath of lengthy underlying litigation which has long been settled, appealed, a nd closed.

Malakoff substantively challenges the monetary sanc tions on the ground that he always acted in this litigati on in good faith and did not multiply the proceedings unreason ably and vexatiously. As a lawyer at the bar for approxi mately thirty years, experienced in class action practice and never previously sanctioned,1 he contends that the motion s he

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1. Malakoff claims that he practiced law for thirty years and has a substantial professional interest in class action p rocedures. He asserts

that he was a member of this Court's 1985 Task Forc e 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 Settlin g 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 M artindale-Hubbell is

AV.

29filed were reasonably warranted. Even the Magistrat e Judge

(MJ) in assessing the sanction, stated that "[w]hen viewed individually, each single instance of misbehavior b y Mr. Malakoff might not warrant the sanction arrived at by the Court. But considered as a whole, his transgression s evidence a pattern of obfuscation and mean spirited ness." (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 proceed ings vexatiously and acted wilfully in bad faith. Obfusc ation 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 purpos e of S 1927 is to deter intentional and unnecessary dela y 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 a nd vexatious; with a (3) resulting increase in the cos t of proceedings; and (4) bad faith or intentional misco nduct." In re Prudential, 63 F.Supp.2d 516, 520 (D.N.J. 199 9).

There is no evidence whatsoever that Malakoff filed the motion to recuse Judge Wolin for the purpose of intentionally or unnecessarily delaying the proceed ings. 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 reject ed Malakoff's contention that even if ex parte commun ication was permissible, he was entitled to notice of the m eetings and an opportunity to object. The Court reasoned th at Malakoff had consented to the Court's ex parte communication pertaining to settlement long before his recusal motion, and the alleged communications betw een counsel and the court involved settlement of the na tionwide

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

involved. Id.

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

30December 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, Arth ur F. Ryan, and that he met with Select Insurance Regulat ors about the proposed settlement without advance notic e to Kettle/Krell, Malakoff's clients. Malakoff also bel ieved that those meetings went beyond the scope of his origina l consent. Malakoff also complained, inter alia , abo ut the Court's failure to allow discovery pertaining to th e fairness of the proposed settlement.2

Malakoff may have misconceived the extent of the Di strict Court's authority and its justifiable necessity in meeting with officers of Prudential in effectuating this co mplex settlement. Malakoff also may not have shown good judgment in his motion to recuse, but mistake of ju dgment is not uncommon among lawyers or even judges. A mis take of judgment does not per se constitute wilful bad f aith. Baker Indus. Inc. v. Cerberus Ltd., 764 F.2d 204, 2 09 (3d Cir. 1985). Judge Walls made no specific finding th at Malakoff filed the motion in bad faith but only con curred in the MJ's "conclusions" rejecting Malakoff's content ion 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 findi ng of bad faith with respect to Malakoff's recusal motion

.

In addition to the foregoing reasons, Malakoff's mo tion for recusal was based on three additional grounds. A fair and balanced reading of these grounds, however, ren ders questionable at best any finding of intent to delay

, vexatiousness, or bad faith. To sanction an attorne y for questionably egregious conduct unfairly burdens leg itimate, zealous advocacy, especially in a massive national class

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2. Malakoff was not the only person to object to th e fairness of the proposed settlement. The docket entries show that t here were many others, including the Insurance Commissioner for th e Commonwealth of Massachusetts, the Texas Department of Insurance, t he 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.

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

case, innovative and resourceful procedures.

In the Pennsylvania proceedings in Rutt v. Prudenti al, Prudential's attorney informed the state judge that Judge Wolin was "receptive to a discussion" with the stat e judge regarding potential ethical improprieties regarding Rutt's counsel. Malakoff reasonably may have believed that Prudential's suggestion to contact Judge Wolin impl icated Judge Wolin in an improper plan to aid Prudential i n delaying state court trials like Rutt until the cla ss action settled. Malakoff believed that evidence produced a t the

state court in Rutt and other state cases could "be crucial in evaluating the fairness of the proposed settleme nt" in the federal court. Although later developments revealed that Malakoff erred on this basis for recusal, such an e rror is not a violation of S 1927. An attorney who reasonab ly

believed in the merits of a motion when filed shoul d not be sanctioned. To do so subjects every litigating lawy er whose

motion is denied the risk of sanctions.

Malakoff also based his recusal motion on alleged e x parte contacts between Judge Wolin and David Gross, Esquire, counsel for a former Prudential employee n amed David Fastenburg who was accused of destroying mate rial Prudential documents. During an October 21, 1996, hearing, Judge Wolin appeared to refer to a persona l conversation with Mr. Gross by stating, "I know Mr. Fastenburg's lawyer . . . [a]nd Mr. Gross vehementl y denies on behalf of Mr. Fastenburg that any document was e ver destroyed by Mr. Fastenburg." The Judge's comments come in connection with charges (later proven) that Prud ential had destroyed material documents. Prudential fired Fastenburg for allowing the destruction of document s in the office he supervised. In response, Fastenburg s ued for wrongful termination. In re Prudential, 148 F.3d 28 3, 343 (3d Cir. 1998). Although it became clear to some by midDecember, 1996, that Judge Wolin had a legitimate b asis for his October statement3 and that he had not enga ged in improper ex parte communications with Mr. Gross, Malakoff already had filed his recusal motion on De cember 3, 1996, well before his belief was challenged.

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3. Mr. Gross's denial was reported in some newspape rs.

32Malakoff believed that Judge Wolin had engaged in

improper ex parte communications because the legiti mate sources of information cited by Judge Wolin never mentioned a "vehement" denial by Mr. Gross, and Jud ge 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 unreason able or made in bad faith. Again, there is no evidence t hat Malakoff's interpretation of these proceedings inte ntionally 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, 19 96, conference with state insurance regulators. Malakof f cites statements made by the Judge that this was "my settlement," that all of those present must "hang t ogether" 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 negotiat ions, I wasn't just a pretty face." In the underlying appea l of the settlement on the merits, the Court reviewed the cl aims that these statements of Judge Wolin demonstrated h is 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 propose d settlement or the proposed settlement class.

Whether the foregoing incident offered a colorable basis for a motion to recuse may be arguable, but there i s nothing about it that warrants the imposition of sa nctions under S 1927. Malakoff only needed a single reasona ble, 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 dela y or extension of the proceedings. The record reasonably supports the conclusion that Malakoff had a colorab le basis

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4. Malakoff alleged improper ex parte communication s, and those communications, if true, would have been a valid ba sis for recusal regardless of the District Court's further orders a gainst Prudential.

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

action, Malakoff's motion probably served a very us eful public purpose in removing any mis-perception of th e 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 propose d

settlement. There is no evidence that the recusal m otion justified sanctions under S 1927 and no findings of wilful bad faith to support it. Punishment under this stat ute 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 so metimes difficult to distinguish between sanctions imposed under S 1927 and those imposed under the inherent power o f the court. The distinction is crucial, because we hold that the disciplinary conduct sanctions under the court's in herent powers violated due process. Sanctions under S 1927 are compensatory in nature and are intended to compensa te opposing counsel for vexatious and unreasonable con duct that unnecessarily delayed or extended the litigati on. Yet, in considering "Additional Bases for Sanctions" und er S 1927, the District Court stated that the MJ"concl uded that Mr. Malakoff abused the privilege of practicin g before

this Court. His behavior since his arrival on the s cene in this litigation has been deplorable." In re Prudent ial, 63 F.Supp.2d at 521. This sweeping assessment of the attorney's conduct, even if it were unchallenged, d oes not support a violation of the statute. This unsupporte d, conclusory statement reflects a mindset of the inhe rent power of the court that colored the District Court' s judgment with respect to the motion for sanctions u nder

S 1927.

The majority points to the rejection of Malakoff's argument on the recusal motion on the appeal to thi s 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 other wise

violated S 1927.

34II.

Among the subsequent tag-along allegations filed by Lead

Counsel to bolster their S 1927 cross-motion for sa nctions

was Malakoff's criticism of the fee examiner. This Court considered the issues on the appeal of the underlyi ng 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 review ing the imposition of sanctions, concluded that Malakoff"ma y have been entitled to object to Mr. Greenberg's ultimate conclusion." In fact, the objection resulted in a r emand by the Court of Appeals for further consideration of a ttorneys' fees. Judge Walls, however, concluded that Malakoff had no basis for objecting to the appointment. However, su ch an objection in no way violated S 1927; Judge Walls ma de 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 lig ht 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 a t this point; what is significant is that there is no evid ence that the objection unreasonably multiplied the litigatio n in

violation of S 1927.

Judge Walls then turned to the MJ's observations th at Malakoff had failed to provide Judge Wolin with cou rtesy copies of his motions before releasing them to the media. Malakoff responded that he was advised for the firs t 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 h e 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 p apers. As an experienced attorney, he should have realized that the clerk's office would not deliver courtesy copie s to chambers immediately." Id. at 521-522. Judge Walls asserted that Malakoff's failure to accord Judge Wo lin the

35same respect as the media was unacceptable "and ind icates

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

The failure, however, to provide copies of the moti on papers to the Court may have been arguably thoughtl ess or even discourteous, but clearly not a violation ofS 1927. The Court did not find that the failure to supply copie s of Malakoff's motions to Judge Wolin at the time of fi ling multiplied or prolonged the litigation. It could no t have done so. In no way did this conduct delay the litig ation or

add to the burden of Lead Counsel as to warrant compensatory sanctions under S 1927. Neither the Di strict Court nor the MJ could or did make such a finding.

The District Court then examined Malakoff's 23rd an d 24th affidavits, both filed within three days of ea ch other and subsequent to Malakoff's motion for recusal. Ma lakoff claimed that the affidavits were warranted. He argu ed that the 24th affidavit was intended to supplement and c orrect the legal and factual bases for motions then pendin g before the District Court. The District Court, however, co ncluded that the affidavits merely restated arguments previ ously rejected, and repeated allegations of impropriety o n 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 co urt made no findings that they multiplied the proceedings an d were

filed in bad faith.5

As for Malakoff's problems with the discovery proce ss, 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 re luctance to review the thousands of documents in the proceeding s and

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5. The majority offers no explanation how the affid avits multiplied the litigation and why they justify compensatory compen sation to Lead Counsel as sanctions under S 1927. Class Counsel, i ncluding Lead Counsel, already were awarded fees in the sum of $4 5 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.

36instead requesting a keyword search of precedential

documents in New York; and (2) a disregard of Judge Wolin's order to parties seeking to present evidenc e at a fairness hearing to examine the evidence at the mov ant'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 s aw the enormous volume of material at the document deposit ory, 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 requ est that they fax them at Malakoff's expense. Judge Walls concluded that this conduct "unreasonably multiplie d the straightforward discovery process and delayed the u ltimate settlement of the case." In re Prudential, 63 F.Sup p.2d at

522.

Judge Walls relies on the MJ's conclusions as to th e effect of these two incidents. Neither he nor the M J explain, however, how an effort on the part of a lawyer to s implify and expedite the discovery process by requesting a "keyword" search and a chart of the enormous mounta in of documents multiplied or prolonged the proceedings. It is incomprehensible that a request for a "keyword" sea rch of precedential documents intentionally multiplied, de layed, or extended the litigation. No explanation is given ho w it did do so. The "keyword" search was denied. Had it been granted, it would have expedited discovery rather t han delayed it or the settlement. Similarly, it is not understandable why the request for charts summarizi ng the evidence or for the "keyword" search resulted i n "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 19 27. By no stretch of the imagination could such requests h ave unreasonably "multiplied the straightforward discov ery process and delayed the ultimate settlement of the case," as the Court concluded. Id. In fact, until Lead Counse l

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 mo tion

37is 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. J udge Walls noted in his opinion that the MJ had examined the two motions and had concluded that they were identi cal, only refuted Lead Counsel's December 1999 cross-mot ion, did not present an affirmative ground for sanctions , and improperly side-stepped Rule 11's twenty-one day sa fe harbor provisions. Id. at 523. The District Court s aw 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, howeve r, believe that Malakoff was "entitled to cut-and-past e his

Rule 11 motion and transform it into a S 1927 motio n." Id. The District Court ultimately concluded that the tw o motions were identical, baseless, and filed in bad faith.

On appeal, Malakoff contends that he was entitled t o seek both S 1927 and Rule 11 sanctions for the same conduct, and was entitled to pursue the S 1927 sanc tions, regardless of whether Lead Counsel took advantage o f Rule 11's safe harbor in withdrawing the offending docum ents. He argues that the legal standard for S 1927 sancti ons is different and far more stringent than for Rule 11 s anctions. He asserts that S 1927 sanctions are warranted agai nst a party who unreasonably and vexatiously multiplied t he proceedings and that a finding of bad faith is nece ssary. On the other hand, Rule 11 sanctions require a more le nient standard of proof, no requirement of bad faith, and aims at a party who has made unsupported or frivolous argum ents in the filings. He reasonably believed that the two motions satisfied the requisite standards because they alle ged:

Liaison and Lead Counsel's motion [for sanct ions], supporting briefs, affidavits and other pape rs referred to herein were filed unreasonably and vexati ously in order to multiply the proceedings. Further, these motions and other papers were frivolous. Fin ally, these papers were filed solely to intimidate Micha el P. Malakoff who is objecting to the settlement procedures

38used, the settlement, and the request for $9 0 million in

attorneys' fees.

(A-2617).

Malakoff concedes that the motions are largely iden tical because they are based on the same conduct. This, h e argues, does not necessarily render them improper. The standards and purposes of each differ. He also deni es that his motions only refute the cross-motion of Lead Co unsel. On the contrary, he argues his motions explicitly s tate that

Lead Counsel's motion for sanctions was filed frivo lously 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 groun ds for sanctions, or whether the S 1927 motion was for the purpose of side-stepping Rule 11's safe harbor prov ision.

We must determine whether the District Court erred when it "conclud[ed] that these identical motions were b aseless

and filed in bad faith." Id. at 523. The District C ourt made no findings in this respect; it merely announced it s 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 un der S 1927, the District Court "adopt[ed] Magistrate Ju dge Pisano's conclusion that `it is clear that, after v iewing his entire course of conduct over more than three years before this Court, Mr. Malakoff takes an impractical, hype rtechnical, and unreasonable approach to litigation. ' " Id. The purpose of S 1927, however, is not to alter the style,

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

Counsel's S 1927 motion and advanced no coherent le gal argument as to why they should be sanctioned; that by submitting i dentical papers on

the two sanctioned motions Malakoff abused the sanc tions 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 i n violation of the

Statute.

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

lawyer. It empowers the punishment of a lawyer who, in wilful bad faith, unreasonably and vexatiously mult iplies the proceedings.

Significantly, the MJ recommended "that pursuant to S 1927, Mr. Malakoff should pay to Class Counsel th e 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 dra conian sanction, it is obvious from reading the MJ's Repor t and Recommendation that he ignored the statute. The sta tute 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 offend ed lawyer as a result of the alleged unreasonable dela ying action. The record here is devoid of any evidence p roving "the excess costs, expenses and attorney's fees" re asonably

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 ve xatious conduct on the totality of the campaign Malakoff wa ged 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). Howeve r, Malakoff and his clients were captives of the order consolidating their state cases in the New Jersey f ederal court.7 Malakoff respectfully and professionally sa tisfied the procedures and tools for objection provided by stat ute and the rules of court. Falling back on the "totality o f the campaign" in lieu of specific findings of wilful ba d faith and evidence of excess costs and time incurred by Lead Counsel is not, in my opinion, an acceptable basis for sanc tions

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7. Prudential's conduct had been under investigatio n 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 unt il after the Judicial Panel on Multidistrict Litigation centralized all t he cases before Judge Wolin on August 3, 1995.

40under a penal statute and ignores the "detailed fin ding"

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 determinati on to impose monetary sanctions pertaining to Malakoff's behavior. Yet, the MJ acknowledges that "[w]hen vie wed individually, each single instance of misbehavior b y Mr. Malakoff might not warrant the sanction arrived at by the Court." (Maj. op. at 21) Also significant, Lead Cou nsel never

introduced evidence of increased costs and time to support their cross-motion for sanctions. Moreover, this co urt has stated that before a court can order the imposition of attorneys' fees under S 1927, it must find bad fait h 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 W illiams 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 c omplex 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, eac h is different, and here many state and federal actions were consolidated for disposition. An objecting lawyer s hould not be expected to be a quiescent, listless participant in the proceedings without expressing contrary view or the ories; the lawyer should have reasonable leeway for expres sion and argument.8 In another class action, this Court recently

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

acted in bad faith. Amicus Curiae Public Citizen Li tigation Group argues that objectors like Malakoff play a vital but diffi cult role in class

action settlements. Public Citizen argues that objectors s hould be encouraged, not chilled, because of the beneficial role they pl ay. Objectors and their counsel pursue legitimate and important goals by se eking to block or significantly improve class settlements. "Objecting is often the only way to protect some class members' interests, even if c lass members have the opportunity to opt out of the class." Amicus Br. at 10-11.

41noted some of the uncertainties and difficulties th at beset

the court in litigation where most of the parties a re 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 law yers in the way that an individual client would, and bec ause of doubts that a typical lead plaintiff . . . i s a terribly good agent for the class.

In re Cendant Corp. Litig., 264 F.3d 201, 282 (3d C ir. 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 retai ned. The degree of responsibility is further enhanced in this case because the class consists of ordinary policy holde rs and not sophisticated institutions or investors. Theref ore, a lawyer with objector status plays a highly importan t role for

the class and the court because he or she raises ch allenges free from the burden of conflicting baggage that Cl ass Counsel carries. The objecting lawyer independently can monitor the proposed settlement, costs, and fees fo r Class Counsel and, thus, aid the court in arriving at a f air 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 o f the proposed settlement, and the costs and fees to be p aid from the settlement fund, he or she not only renders a s ervice to the class, but also aids the court. The record reas onably supports the conclusion that Malakoff's objector st atus had the wholesome effect of providing a careful scrutin y of the fairness of a gigantic settlement affecting million s of policyholders nationwide. He indisputably enhanced the amount of the settlement, and secured a reconsidera tion of

class counsel fees.

After all, Class Counsel has very little communicat ion

with the members of the class and knows little abou t them individually. The members of the class play little or no role

42in the selection of lead or liaison counsel. Defend ants'

counsel and Class Counsel reach a point where they are cooperating in an effort to consummate the settleme nts. Even the court at this point may be inclined to fav or settlement of a huge, complex action, and the gener al atmosphere becomes largely cooperative.

Under such circumstances, the motions and arguments of an objecting lawyer understandably may be discor dant and disagreeable, but not necessarily unreasonable. The objections may be worthy and, at least useful becau se, as the distinguished historian, Allan Nevins, wrote ma ny years ago, from the conflict of ideas comes crystallizati on of thought. Objections serve a highly useful vehicle f or the members of the class and the public generally; they require consideration by the court and its disposition of t hem usually provides reassurance that the settlement an d the fees approved are fair and just.

Thus, I believe that as counsel for objecting plain tiffs, Malakoff played a useful and even constructive role in this litigation. He may have been overzealous and tenaci ous, but Lead Counsel, as experienced, seasoned class ac tion lawyers, are no shrinking violets. They do not comp lain that Malakoff was deceptive or mendacious. On the other hand, his services, acknowledged by Lead Counsel, enhance d the class settlement by $50 million, and he succeeded i n 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 rever se the imposition of the severe sanctions imposed on Malak off

under S 1927.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

43