Antolini v. N Corporation

Background

The court had previously sanctioned the defendants for repeatedly failing to comply with discovery orders. The sanctions required the defendants to pay the attorneys’ fees that the plaintiff’s counsel incurred in connection with the plaintiff’s letter motions seeking sanctions. The court ordered the plaintiff to submit an accounting of those fees.

The plaintiff submitted an initial fee application and later requested permission to supplement it after reporting that the defendants continued to withhold important discovery, including nearly all discovery from N Corporation. During two status conferences, the court learned that defense counsel Oliver Zhou had never communicated with any representative of N Corporation about his claimed representation of the company or its discovery obligations. The court found that Zhou had nevertheless represented to the court and the plaintiff that he represented N Corporation and was complying with, or trying to comply with, its discovery obligations.

The defendants initially did not oppose the supplemental fee accounting by the deadline. After new counsel appeared, the court granted an extension, and the defendants filed an opposition.

Court’s Analysis

The court said its earlier factual findings and sanctions against the defendants had already been entered. In this order, it found that the conduct causing the discovery violations was almost entirely attributable to Zhou’s bad-faith conduct. Specifically, the court identified his representations that he represented N Corporation, was communicating with the company, and was diligently working with its representatives to provide discovery.

The court found that Zhou continued to present himself as N Corporation’s counsel for nearly five months despite having no communication with an agent of the company, receiving no documents or other discovery from it, and failing to confirm that he represented it. The court concluded that these misrepresentations prevented the plaintiff from obtaining discovery, caused violations of multiple discovery orders, delayed the case, and required the parties and the court to spend additional time and resources on discovery and sanctions motions.

The court considered the possibility that Zhou initially believed he represented N Corporation because defendant Shiyang Hui allegedly wanted Zhou to represent Hui, Tipsy Shanghai, and N Corporation together. But the court stated that, even if that initial belief were genuine, Zhou’s continued failure to contact N Corporation or confirm the representation after repeated discovery orders still amounted to bad faith.

Authority and Due Process

The court relied on its inherent power to supervise its proceedings and sanction attorneys or litigants for bad-faith conduct. It also discussed 28 U.S.C. § 1927, which can require an attorney who unreasonably and improperly multiplies proceedings to personally pay resulting excess costs, expenses, and attorneys’ fees. The court explained that sanctions under these authorities generally require clear evidence of improper conduct and improper purpose, subject to the legal standards described in the order.

Because due process requires notice of the conduct that may be sanctioned, the governing standard, and an opportunity to respond, the court used this order to give Zhou specific notice and authorize him to be heard.

Order

The court stated that there was a sufficient basis to impose sanctions against Zhou in the form of the plaintiff’s counsel’s attorneys’ fees incurred in connection with each sanctions letter motion through June 17, 2020, when Zhou corrected his earlier representation to the court. The order did not impose the final personal fee sanction at that point. It allowed Zhou to file a response of no more than ten pages by September 9, 2020, and allowed the plaintiff to file a reply of no more than five pages by September 23, 2020.