Weiss v. Yotta Technologies, Inc.

Background

Matthew S. Weiss sued Yotta Technologies, Inc. under the federal Electronic Fund Transfer Act and New York law. He alleged that eleven transfers totaling $42,290 were unauthorized and that Yotta failed to investigate or provide provisional credit after he reported them.

Yotta later presented third-party records indicating that the transfers went to CashApp and ApplePay accounts belonging to Weiss. The records included identifying information associated with Weiss. The court also relied on Weiss’s communications with Yotta, including a message stating that he would move $10,000 himself using ApplePay or Zelle, followed by transfers to his ApplePay account. The court found that this evidence contradicted the allegations in his complaint.

Yotta’s answer asserted counterclaims and described other lawsuits filed by Weiss involving similar identity-theft allegations. Weiss’s attorney later moved to withdraw, and the parties agreed to dismiss all claims and counterclaims without prejudice while the court retained authority to decide sanctions. In an earlier opinion, the court denied Yotta’s motion for sanctions under Rule 11 because Weiss and his attorney had complied with Rule 11’s safe-harbor requirement. The court nevertheless ordered Weiss to explain why sanctions should not be imposed under the court’s inherent authority.

Court’s analysis

The court explained that federal courts have inherent authority to sanction a party for bad-faith, vexatious, wanton, or oppressive litigation conduct. It said this authority requires clear evidence that the conduct was entirely without a legitimate basis and was motivated by an improper purpose. The court also stated that a person facing sanctions must receive notice of the conduct at issue, notice of the authority being used, and an opportunity to respond.

After reviewing the evidence and Weiss’s response, the court found that Weiss fabricated the claims in this case, committed fraud on the court, and engaged in vexatious, bad-faith, and oppressive litigation. The court also considered evidence concerning Weiss’s other litigation, alleged false reports and fabricated documents, and threatening or offensive communications with Yotta personnel and other opposing parties. The court characterized the broader evidence as showing that Weiss had likely engaged in a pattern of fraudulent and abusive litigation conduct, while its sanctions ruling addressed the conduct supported by the record.

Ruling

The court sanctioned Matthew S. Weiss under its inherent authority. It awarded Yotta the full amount of its reasonable attorney’s fees and costs: $37,365.50 incurred through December 2023 and $16,000.17 incurred from January through September 2024, for a total of $53,365.67. Weiss was ordered to pay that amount to Yotta through Yotta’s counsel within 30 days.

The court also ordered Weiss to file a copy of the opinion and order in every pending and future lawsuit in which he is a party and the allegations involve identity theft or unauthorized transactions. The opinion states that Yotta’s motion to seal portions of its invoices was granted, and the clerk was directed to terminate that motion. The court’s conclusion does not describe the sanctions as a dismissal of the underlying case; the earlier dismissal of the claims and counterclaims had been without prejudice.