District Judg e Nichola s G. Garaufis of theUnit ed S t at es District Court for theEaster n * District of New York, sitting by designation. 09 -47 82 -cv L aw r encev . Wil der

Ri chm an S e curit ie s Co r

p. UNI TED S TATES CO URT O F AP PEALS F O R T H E S E C O N D C IR C U IT S UM M ARY OR DER R U L I N G S B Y S U M M A R Y OR D E R D O N OT HA V E P R E C E D E N T I A L EF FE CT . C I T A T I ON T O A S UM M ARY ORDE R F I L E D ON OR AF T E R J ANUARY 1 , 2 0 0 7 , I S PE RM I T T E D AND I S GOVE RNE D BY FED ERA L RU LE O F AP PELLA TE PRO C EDU R E 32 . 1 A N D TH I S C O U R T’ S LO C A L RU LE 32 . 1. 1. W H EN C I TI N G A S U M M A R Y O R D ER I N A D O C U M E N T F I L E D W I TH TH I S C O U R T, A PA R TY M U ST C I TE E I T HE R THE F E D E R A L A P P E N D I X OR A N E L E C T R ON I C D A T A B A S E ( W I T H T HE N OT A T I ON “ S U M M A R Y OR D E R ” ) . A P A R T Y C I T I N G T O A S U M M A R Y OR D E R M U S T S E R V E A COP Y OF I T ON A N Y PAR TY N O T REPR ESENTED BY CO U N SEL. A ta s t at ed t erm of the U ni t ed St at es C our t of A ppeal s for the Second C i r cui t , hel d at the D ani el Patr i ck M oyni han U ni t ed St at es C our thous e, 500 Pear l St r eet , i n the C i ty of N ew Y or k, on the 16 dayof Sept ember , tw o thous and t en. th P R E S E N T : R E E N A R A G G I,

GE RA RD E
. L YNC H, C i r cui tJudges , N I CH O LA S G
. G A RA U FI S, D is tr i ct Judge
. *

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- J OH N F. LAW REN CE, P lai nt i f f

-Appel lant , v. N o. 09- 4782- cv W IL D E R R IC H M A N S E C U R IT IE S C O R P ., D ef endant

-Appel l ee .

--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- A P P E A R I N G F O R A P P E L L A N T : D A V ID R
. S C H A E F E R , B re n n er, Salt zm an & W al l m an LL P, N ew H aven, C o n n e c ticu t.2

APPEARI NG FOR APPELLEE S: R O B E R T W
. TUR KEN ( Dav i d A
. B al l , C ohen a n d W o lf

, P .C ., B ri d g e p o rt , C o n n e c tic u t, on br i ef ) , B i l zi n Sum ber g B ae na Pr i ce & A xel r od L L P, M i ami , Fl or i da. A ppe a l f r o m a j u d g me n t o f th e Uni t e d St a t e s Di s tr i c t Cou r t f o r th e Di s tr i c t of C o n n e c tic u t ( J a n e t B o n d A rt e rt o n , Judge ; J o a n G la z e r M a rg o lis , M agis tr at e Judge ). UP ON DUE CO NS I DE RA T I ON, I T I S HE RE BY OR DE RE D, ADJ UDGE D, AND D E C R E E D thatthe j udgm ent of the di s tr i ct court ent er ed on O ct ober 23, 2009, fi nal i zi ng a
s anct i ons aw ar d i n L aw r ence v. W i l derR i chman Secur i t i es C orp. , N o. 3: 04cv538 ( her eaf t er

“ W ild e r R ic h m a n S e c u ri tie s ” ), i s A F F IR M E D
. Pl ai nt i ff J ohn F. L aw ren ce a nd defe ndantW i l derR i chman Secur i t i es C orp. have engage d i n ext ens i ve l i t i gat i on overa numberof y ear s reg ard ing L aw r ence ’ s cl ai m for
comm i s s i ons ow ed on the s al e of s ecur i t i es . A m ong the i s s ues di s put ed bythe part i es w as
w h e th e r th e p ro p e r f

o ru m f o r re so lu tio n o f

th e c o m m iss io n s c lai m w a s ju d icia l o r a rb itral. In th is ap p ea l, L aw ren ce an d h is atto rn e y s in the d istri ct co u rt(co ll ec ti v ely , “L aw ren ce ”), chal l enge a n aw ar d of s anct i ons ent er ed pur s uantt o Fed. R
. C iv. P
. 11( c) forfi l i ng and
ma i n t a i n i n g a mot i o n t o e n j o i n d e f e n d a n t s f r o m pu r s u i n g a rb i tr a t i o n o f th e c o mmi s s i o ns di s put e. W e as s um e the part i es ’ fami l i ar i ty w i th the fac t s and pr ocedur al hi s t oryof thi s and
r el at ed ca s es i nvol vi ng t hes e l i t i gant s , w hi ch w e r efe r ence onl y as nece s s ary t o expl ai n ourI n a s epar at e opi ni on i s s ued t oday , w e addr es s L aw r ence ’ s appea l fr om an aw ar d of 1 s anct i ons i n t he r el at ed ca s e of Law r ence v. R i chman G r oup of C T , N o. 09- 4853- cv. 3 decis i on t o aff

i rm the aw ard of sancti on s i n W i l der R i chm an S ecuri t i es. 1 W e re v iew a n a w a rd o f

R u le 1 1 sa n c tio n s fo r ab u se o f d isc re tio n , se e C o o ter & G e ll
v. H art m ar x C orp. , 496 U
. S. 384, 405 ( 1990) , w hi ch w e w i l l i dent i fy onl y w her e the di s tr i ct
courtrul i ng i s bas ed on an e r r orof l aw or a cl ear l yerr oneous vi ew of the fa ct s , or“ca nnot be l ocat ed w i thi n the ra nge of perm i s s i bl e deci s i ons , ” K i obel v. M i l l s on, 592 F. 3d 78, 81 ( 2d C ir . 2 0 1 0 ). R u le 1 1 (b ) o f th e F e d e ra l R u les o f C iv il P ro c e d u re sta tes th a t a n a tto rn e yw h o p re se n ts “a pleadi ng , w ri t t en m oti on , or other pap er” t o the court thereby “cert i fi es” that t o the best of hi s know l edge, i nform at i on, and bel i ef f or m ed af t era r eas onabl e i nqui ry , the fi l i ng i s ( 1) notpr es ent ed foranyi m pr operpurpos e, “s uch as t o hara ss, c aus e unnec es s arydel ay , or needl es s l yi ncr eas e the cos tof l i t i gat i on”; ( 2) “w arr ant ed by exi s t i ng l aw or by a nonfr i vol ous
ar gum entforext endi ng, m odi fy i ng, orr ever s i ng exi s t i ng l aw or for es t abl i s hi ng new l aw ”;
an d (3) su p p o rt ed in fac ts kn o w n o r l ikelyto b e d isco v ere d o n fu rth er inv esti g ati o n . A co u rt
m ays anct i on an att orney , l aw fi r m , or party that vi ol at es R ul e 11( b) , butonl yaft erpr ovi di ng not i ce a nd a r eas onabl e opportuni tyt o r es pond. See Fed. R
. C i v. P. 11( c) ( 1)
. C ons i s t ent
w i th thes e r equi r ement s , a partym ovi ng forR ul e 11 s anct i ons m us tdo s o i n a fi l i ng “made
s epar at el yfr om any other m ot i on. ” Fed. R
. C i v. P. 11( c) ( 2)
. T hi s s ect i on pr ovi des a “s afe harbo r ” i n th a t th e mot i o n mus t n o t o n l y s p e c i f y th e d e f e c t f o r whi c h s a n c t i o n s a r e s ought4

butm us tnotbe fi l ed unt i l the al le ged vi ol at ori s aff or ded tw enty - one day s t o w i thdr aw or
corr ect the off

endi ng document
. See i d. ; s ee a l s o I n r e Penni e & E dm onds L L P, 323 F. 3d 8 6 , 8 9 ( 2 d Ci r . 2 0 0 3 ) ( o b s e r v i n g th a t“ s a f e h a rb o r ” p r o v i s i o n “ f

u n c t i o n s a s a p r a c t i c a l t i me l i m i t , and mot i ons have be en di s al l ow ed as unt i m el yw hen fi l ed aft era poi nti n the l i t i gat i on
w hen the l aw y ers oughtt o be s anct i oned l acke d an op por tuni tyt o corr ectorw i thdr aw t he ch all en g ed su b m issi o n ”). 1
. L aw ren ce L ac k ed a R ea so n ab le B asis in L aw fo r P lead ing Irr ep ara b le H arm L a w re n c e a rg u e s th a t h e p o ss e ss e d a re a so n a b le b a sis in law f o r ple a d in g irre p a ra b le h a rm in su p p o rt o f

h is in ju n c tio n m o tio n . W e h a v e c o n sid e re d e a c h o f th e th re e a rg u m e n ts th a t La wr e n c e s e r i a l l ya d v a n c e d i n th e d i s tr i c tc o u r tt o s u p p o r th i s i rr e p a r a b l e h a r m c l a i m,
see , e.g., C ityo f N ew Y o rk v
. G o lden F ea ther S m o k e S h o p , Inc
. , 5 9 7 F
. 3 d 1 1 5 , 1 2 0 (2d C ir
. 2 0 1 0 ) , a n d we c o n c l u d e th a tn o n e i s r e a s o n a b l yg r o u n d e d i n l a w. L a w re n c e f

irst a ss e rte d th a t h e w o u ld b e irre p a ra b ly h a rm e d if c o m p e lled to su b m it t o arbi tr at i on beca us e he w oul d have t o adopta pos i t i on i n the arbi tr al forum i ncons i s t ent
w i th thatw hi ch he w i s hed t o advanc e i n the di s tr i ct court . L aw r ence does not– and ca nnot
– ar gue on thi s appea l thats uch a c l ai m of i nj uryhas any su p p o rti n l aw . Feder al R ul e of C i vi l Pr ocedur e 8( d) ( 2) s peci fi cal l yperm it s a partyt o pl ead i ncons i s t entpos i t i ons i n the al t ernat i ve, even i n the same act i on. See A etna C as . & Sur
. C o. v. A ni er o C oncr et e C o. , 404 F. 3d 566, 585 ( 2d C i r . 2005) ( r ecogni zi ng that “party m ay pl ead t w o orm or e s t at ement s of5

a cl ai m . . . r egar dl es s of cons i s tenc y ” (i n ternal quot at i on m arks om i t t ed) )
. A tanyr at e, beca us e L aw r ence has agr eed t o arbi tr at e any di s put e he has w i th W i l derR i chman, he ca nnot compl ai n thathe i s i njured bybei ng for ced t o r es pond t o an arbi tr at i on demand bys t at i ng
w h e th e r h e d o e s o r d o e s n o t h a v e a n ys u c h d is p u te . L a w re n c e n e x t ar g u e d in th e d istric t c o u rt th a t co m p e lled a rb itratio n w o u ld c a u se h im irre p a ra b le h a rm b e c a u se th e a rb itral f o ru m w o u ld n o t af

f o rd h im th e c o n s ti tu tio n a l rig h ts guar ant eed c i vi l l i t i gant s i n A r t i cl e II I court s . T hi s courthas l ong r ej ect ed s uch a c l ai m of i nj ury . See, e. g. , D es i der i o v. N at ’ l A s s ’ n of Secs
. D eal er s , I nc. , 191 F. 3d 198, 206- 07 ( 2d C i r . 1999)
. W hi l e Law r ence ci t es a numberof ca s es forthe pr opos i t i on that“a pa r tydoes
su f f e r irre p a ra b le h a rm w h e n f o rc e d to a rb itrate a d isp u te w h ich th a t p a rty h a s n o t a g re e d to
a rb it r a te ,” A p p e llan t’s B r. at 4 6 , h e ig n o re s th e f a c t th a t h e e x p re ss lya g re e d to a rb itrate di s put es w i th W i l der R i chman. A party s uffe r s no l egal l ycogni zabl e i nj uryatal l , l etal one irre p a ra b le in

ju ry , b yb e in g c o m p e lled to e n g a g e in a rb itratio n to w h ich h e h a s c o n tra c tu a lly agr eed. In ste a d , L a w re n c e a rg u e s o n a p p e a l th a t “e q u itab le e sto p p e l ” prov id e d th e re a so n a b le leg a l b a sis f

o r his c laim o f irre p a ra b le h a rm . W e a re n o t p e rsu a d e d
. A t th e o u tse t, w e n o te that L aw ren ce d id n o t m en ti o n eq u it ab le e stop p el as a b asis fo r his claim o f irrep ara b le ha rm
w h e n h e m o v e d f

o r a p re lim in a ryin

ju n c tio n in th e d istric t co u rt. H e f irst ra ise d th is
a rg u m e n t o n ly a f

ter in ju n c tiv e re lief w a s d e n ied a n d th e p a rties ’ sa n c tio n s litig a tio n w a s w e ll6

advanc ed. S p ec ifi cal l y , L aw r ence ar gued equi t abl e es t oppel i n fi l i ng obj ect i ons t o t he
m a g istr a te ju d g e ’s r e c o m m e n d a tio n th a t th e d istric t co u rt im p o se sa n c tio n s. W h ile th is
c h ro n o lo g yis h a rd lyf

a v o ra b le to L a w re n c e ’s c laim th a t h e h a d a re a so n a b le b a sis in law to cl ai m i rr epar abl e harm atthe t i m e he moved fori nj unct i ve re li ef, the es t oppel ar gum ent
su f f e rs f ro m a m o re f

a tal d e f e c t. A s th e d istric t c o u rt c o rre c tly o b se rv e d , e v e n if e q u itab le
es t oppel m i ghtr eas onabl yhave perm i t t ed L aw r ence t o thi nk he coul d s at i s fythe l i kel i hood
o f s u c c e ss e lem e n t o f

h is in ju n c tio n m o tio n , itp ro v id e d n o b a sis in law f o r h im to c laim ir re p a r a b l e i n

j u ry f ro m b e in g c o m p e lle d to a rb itr a te . T h e la w h o ld s th a t w h e re , a s h e re , a partyhas cons ent ed t o arbi tr at e cer t ai n cl ai m s , an ar gum ent that an adve r s ary ’ s m i s conduct
s houl d es t op hi m fr om s eeki ng r el i ef i n arbi tr at i on i s pr oper l yr ai s ed t o the arbi tr at or . See, e.g., H o w s a m v . D e a n W itter R ey n o lds, I n c., 5 3 7 U
. S
. 7 9 , 8 4 -85 (20 0 2 ). T h u s, the v ery avai l abi l i ty of an es t oppel ar gum ent i n the arbi tr at i on pr ecl uded L aw r ence fr om cl ai m i ng he
w o u ld b e ir re p a ra b ly h a rm e d in th a t f o ru m . In su m , alth o u g h L a w re n c e a d v a n c e d th re e d if f e re n t th e o rie s in su p p o rt o f h is c laim of irrepar ab le h a rm , h e lac ked a go od fai th b asi s i n law for anyof them
. In these ci r cumst ance s , the di s tr i ctcourtr eas onabl yi dent i fi ed a Rul e 11( b) vi ol at i on. b. L aw r ence W as A ffor ded Safe H arborN ot i ce L aw rence a r gues that , even i n the abs ence of a good f ai th bas i s forhi s cl ai m of i rr epar abl e i nj ury , s anct i ons w er e not avai l abl e beca us e def endant s fai l ed t o compl yw i t h t he7

not i ce pr ovi s i ons of R ul e 11( c) ( 2)
. T he r ecor d i s t o the contr ary . D efe ndant s ’ s anct i ons
m o ti o n co m p lai n ed ex p resslyan d rep ea tedlythat there w as n o lega l bas is fo r L aw ren ce ’s p re lim in a ryin

ju n c tio n m o tio n , su p p o rtin g th e a rg u m e n t w ith e x ten siv e c itatio n to L aw r ence ’ s m emora ndum of l aw . T hus , w e ea s i ly co n clud e t hatL aw r ence r ece i ved the defe ctnot i ce r equi r ed by the rul e t o al l ow hi m ei thert o w i thdr aw the cha l l enged mot i on or to d e f e n d h im s e lf f

ro m th e a p p lic a tio n f

o r s a n c tio n s . S e e S to re y v . C e llo H o ld in g s , L .L .C ., 3 4 7 F
. 3 d 3 7 0 , 3 8 9 (2d C ir
. 2 0 0 3 ).
c. T h e A m o u n t of the S an cti o n s A w ard W as W ith in the D istri ct C o u rt ’s D i s cr et i on Fi nal l y , L aw r ence ar gues that the s anct i ons aw ar d of $103, 325. 72 i n att orney ’ s fee s
w as exce s s i ve and thata publ i c r epr i m and w oul d hav e su ffi ced a s a s anct i on. W e ar e not p e rsu a d e d
. T h e d istric t c o u rt h a s “b ro a d d isc re tio n ” to “ tailo r[ ] ap p ro p ria te a n d re a so n a b le
san cti o n s u n d er [ R ]ule 1 1 , ” O ’M all eyv . N
. Y
. C
. T ran sitA u th., 8 9 6 F
. 2 d 7 0 4 , 7 0 9 (2d C ir
. 1990) , i ncl udi ng an aw ar d of att orney ’ s fee s w her e w arr ant ed, s ee Fed. R
. C i v. P. 11( c) ( 2) (r ecog nizi ng dis tri ctcou rt ’s authori tyt o aw ard prevai l i ng party“reas on a b le exp enses, i ncl udi ng att orney ’ s fee s ”)
. W e i dent i fy no abus e of di s cr et i on i n the dec i s i on t o aw ar d fee s in th is c a s e . W her e a di s tr i ctcourtconcl udes thata monet aryaw ar d i s appr opr i at e, i t s br oad d isc re tio n e x ten d s to d e ter m in in g th e a m o u n t o f th e a w a rd . S e e C a iss e N a tio n a le d e C re d it A gr i col e- C N C A v. V al corp. I nc. , 28 F
. 3 d 2 59, 266 ( 2d C i r . 1994) ; E as tw ayC ons tr . C orp.8

v. C i tyof N ew Y or k, 821 F. 2d 121, 123 ( 2d C i r . 1987)
. H er e, the magi s tr at e j udge r evi ew ed tw o s et s of fe es aff

i davi t s and, befor e maki ng herr ecomm endat i on, car eful l ycal cul at ed a
r educt i on i n defe ndant s ’ appl i cat i on t o conform t o the s cope of the aw ar d author i zed bythe d istric t co u rt. T h e a b le d istric t ju d g e th e n h e rse lf r e v ie w e d th e re c o rd a n d , w h ile la rg e ly agr eei ng w i th the magi str ate jud g e, fur therr educe d the s anct i ons aw ar d t o conform t o our interve n ing d ec isi o n in S im m o n s v . N
. Y
. C
. T ran sitA u tho ri ty , 5 7 5 F
. 3 d 1 7 0 (2d C ir
. 2 0 0 9 ). U nderthes e ci r cumst ance s , w e i dent i fyno abus e of di s cr et i on i n the monet aryaw ar d. W e h a v e c o n sid e re d L a w re n c e ’s o th e r a rg u m e n ts a n d f in d th e m to b e w ith o u t m e rit. Ac c o r d i n g l y , th e j u d g me n ta wa r d i n g s a n c t i o n s i s AF F I RMED
. FOR TH E CO UR T: Ca therine O’Haga n Wolfe, C lerk of Court