DNA Sports Performance Lab, Inc. v. Major League Baseball

Background

This omnibus order addressed sealing, civil contempt, and attorney’s fees. Defendants sought an order requiring plaintiffs to explain why they should not be held in civil contempt after plaintiffs failed to pay an earlier attorney-fee award, post a bond, or obtain a stay. The earlier order awarded Major League Baseball and the Major League Baseball Players Association $137,446.25, due November 20 at 5:00 p.m. Plaintiffs paid nothing and appealed the fee award, but did not seek a stay or offer a supersedeas bond.

Plaintiffs argued that they were unable to pay. The court noted evidence that DNA Sports Performance Lab, Inc. had little revenue and that Neiman Nix had limited funds and assets. But the court also found that plaintiffs’ financial condition was self-induced. Nix testified that attorneys had received at least several hundred thousand dollars from settlements and asset sales over several years, including payments to Attorney Lance Reich. The court concluded that plaintiffs had chosen to pay attorneys instead of the court-ordered fee award, despite anticipating a possible adverse fee ruling.

Sealing and confidentiality

The court denied plaintiffs’ request to seal financial information, deposition material, and references in defendants’ supplemental filing, except that it found good cause to seal Nix’s personally identifiable information, including his Social Security number, birthday, passwords, and bank account numbers. The court also denied plaintiffs’ separate request to seal portions of their rebuttal brief because the supporting declaration was inadequate and the unredacted submission did not properly identify the proposed redactions.

The court found no good cause to seal details about plaintiffs’ recent settlements because that information related directly to their inability-to-pay defense and the public’s interest in understanding the alleged disregard of a court order. The court ordered plaintiffs to provide the settlement amounts in sworn declarations or have the depositions reopened for that purpose. It also directed plaintiffs to notify affected third parties about the opportunity to object to disclosure.

Civil contempt

Civil contempt is a court remedy used to compel compliance with an order or compensate a harmed party. The court explained that contempt requires clear and convincing evidence that a party violated a specific and definite court order. Genuine inability to comply is a complete defense, but inability created by the party is not.

The court held plaintiffs in civil contempt because they did not pay the fee award and did not obtain a stay or post a bond. The court did not impose additional financial penalties at that time. Instead, it ordered plaintiffs to identify, with particularity, nonfinancial sanctions that would actually and effectively prevent further harassing litigation. The court stated that it might impose additional financial penalties in a later order.

Attorney’s fees and Attorney Reich

The court separately considered Attorney Reich’s liability for the unpaid fee award. A prior order had found that Reich failed to meet his obligations under Rule 11, which bars baseless filings made without a reasonable and competent inquiry, but had left the question of his joint liability open.

In this order, the court granted defendants’ motions for attorney’s fees against Attorney Reich. It found that Reich had not been candid with the court about facts undermining plaintiffs’ inability-to-pay defense and had continued to enable what the court described as frivolous litigation. Reich was made liable for up to the entire attorney-fee award, but not for more than the total amount he had received from plaintiffs in any matter. If his receipts were less than the fee award, he was ordered to provide a full accounting by March 4 at 5:00 p.m.

The court emphasized that the civil-contempt ruling did not apply to Reich. The court also kept the withdrawal motion filed by Reich and Ronald Richman on hold pending the appearance of new counsel for plaintiffs.