Opinion ID: 570490
Heading Depth: 2
Heading Rank: 2

Heading: The Rulings on Sanctions

Text: 15 In its August Opinion, the court also ruled that the Dominick Companies were entitled to sanctions against Healey and Press, stating that Healey's testimony at trial was totally lacking in credibility, and I am personally convinced that he brought this action in bad faith with the deliberate intent to blackmail the Dominick defendants into paying him off. August Opinion, 132 F.R.D. at 353. The court alluded to McAlister's trial testimony that in December 1987 Healey had stated ... that he was considering suing Dominick & Dominick, and ... that Dominick & Dominick wouldn't want their good name smeared and would be most likely willing to settle. (Trial Transcript (Tr.) 436.) The court, noting that Healey did not directly deny making this statement but merely stated he did not recall having made it, characterized posttrial efforts by Healey and Press to explain the statement as a fabricated explanation and an obvious contrivance. August Opinion, 132 F.R.D. at 353. As to the role of Press, the court stated: 16 It is altogether clear that this case is frivolous. It is also conceivable, and indeed likely, that plaintiff was not forthcoming with counsel initially and that counsel entered the case with the good faith belief that it had substance and merit. However, once the evidence was in, it is difficult for me to understand how counsel could possibly have persisted. There was no evidence whatsoever of the involvement of Dominick U.S. That awareness should have resulted in a dismissal of that claim at least on the eve of trial. It was also manifest early on that plaintiff placed reliance on his own resources in this case.... If that was not enough, the fact that Healey as a member of the Chelsea board of directors voted on December 9, 1987, to retain Dominick Canada and Field for another private placement effort should have made it crystal clear to counsel that he should not proceed with this case further. With all of those indices of spuriousness and with counsel pressing on, I must conclude that Press continued to act as counsel in this case with full knowledge that it had no merit. 17 Id. The court instructed defendants to submit affidavits substantiating their fees and expenses and authorized Healey to file opposition papers. 18 In the wake of the court's August Opinion, Press retained counsel and Healey retained new counsel, and both moved for reargument of the decision on sanctions. Healey argued that he was entitled to reconsideration because the motion for sanctions had engendered a conflict of interest between himself and Press. Press moved for enlargement of the record and argued that § 11(e) of the 1933 Act does not authorize the imposition of sanctions against an attorney and that Rule 11 was not applicable to him in the circumstances. 19 In an Opinion dated December 10, 1990 (December Opinion), reported at 133 F.R.D. 449, the district court denied the motions of Healey and Press and rejected their arguments against imposition of sanctions. As to Healey, the court reiterated the view stated in its August Opinion that there was no conflict of interest between Healey and Press and stating that even had there been one, 20 [a]ny conflict of interest could not have prejudiced Healey because it is clear from the facts apparent at trial and from the court's own observation of Healey's testimony, independent of the arguments of counsel, that the case was frivolous and that Healey brought the action in bad faith. 21 December Opinion, 133 F.R.D. at 453. The court also rejected Press's contentions that § 11(e) and Rule 11 were not applicable to Press in the circumstances of the present case. 22 After considering the submissions as to the amount of the Dominick Companies' fees and expenses, the court awarded sanctions in the total amount of $222,714.07. It held Healey liable for the entire amount; it held Press jointly liable with Healey to the extent of $122,744.25.